ALJDEC decisions subject to certification as final

2012A-2101-ROC · Registrar of Contractors · 2012-10-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 4, 2012, at 8:00 a.m. APPEARANCES: Kenneth and Sara Fletcher (hereinafter “Complainants”) appeared through Sara Fletcher. Dahl Willis Construction LLC dba Construction Restoration Services (hereinafter “CRS”) appeared through its attorney, Richard Mear, Esq., the Cavanagh Law Firm. 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. CRS is the holder of License No. KB-2.222083-D issued by the Registrar of Contractors. 2. This is a residential matter where Complainants suffered fire and smoke damage to their residence. Complainants retained CRS to perform restoration work on their residence. Initially, the scope of the fire and smoke restoration project was estimated to be less than $30,000.00. During the course of remediation work, the scope of the restoration project increased to more than $120,000.00. 3. Complainants performed extra demolition work on their residence. CRS asserted that the extra demolition work performed by Complainants dramatically increased the cost of the restoration project. The parties then became embroiled in a financial dispute and Complainants terminated CRS from the restoration project. Complainants then demanded that CRS return a portion of the monies that had been paid to CRS. 4. When CRS declined to return any money, Complainants filed a formal complaint against CRS with the Registrar of Contractors. 5. The parties were unable to resolve their differences and a Citation and Complaint was issued charging CRS with possible violations of A.R.S. § 32- 1154(A)(1), A.R.S. § 32-1154(A)(2), A.R.S. § 32-1154(A)(13), namely, A.R.S. § 32-1124(B), and A.R.S. § 32-1154(A)(13), namely, A.R.S. § 32- 1158. 6. Jason Harold Jackson (hereinafter “Mr. Jackson”) testified that he is an estimator for CRS. Mr. Jackson acknowledged that he is a qualified licensed independent insurance adjuster. Mr. Jackson stated that the only work that he performed for Complainants’ restoration project was as an estimator for CRS. 7. Mr. Jackson acknowledged that some of the emails that he sent to Complainants on behalf of CRS failed to display CRS’s contractor’s license number. Mr. Jackson testified that Complainants told CRS to stop any construction work on Complainants’ residence until Complainants’ insurance company provided the parties with a definite final amount of money for the restoration project. 8. Mr. Jackson testified that CRS had completed demolition work on Complainants’ residence, including asbestos removal, and was prepared to start construction work on the residence when Complainants told CRS to stop work. Mr. Jackson stated that after CRS stopped work on the restoration project, someone else performed extensive demolition work on Complainants’ residence. Mr. Jackson testified that the extra demolition work significantly increased the scope and cost of the restoration project. 9. Mr. Jackson testified that CRS did not abandon its contract or refuse to perform construction work on Complainants’ residence. Mr. Jackson stated that Complainants terminated CRS from the restoration project on April 12, 2012.[1] 10. Mr. Jackson testified that there never was a final approved estimate for the fire and smoke restoration project on Complainants’ residence from Complainants’ insurance company. 11. Dahl Lewis Willis (hereinafter “Mr. Willis”) testified that he is the owner of CRS. Mr. Willis testified he prepared the Answer to the Complaint. 12. James Alvin Whetten (hereinafter “Mr. Whetten”) testified that he is an employee of CRS. Mr. Whetten testified that he obtained an electrical permit for Complainants’ restoration project. Mr. Whetten stated that there was no expense for obtaining the electrical permit because the damage was caused by the “Monument Fire.” 13. Mr. Whetten testified that Complainants’ insurance policy did not provide coverage for upgrades. Mr. Whetten stated that he advised Complainants that their house should be re-wired to bring the electrical wiring in their residence to code requirements. Mr. Whetten denied that he suggested to Complainants that electrical work be performed without the required permits. 14. Complainant Kenneth Fletcher (hereinafter “Mr. Fletcher”) testified that he was in the hospital with a gunshot wound when the fire occurred in the Complainants’ residence. Mr. Fletcher stated that Complainants terminated CRS from the restoration project because they received an email from CRS that indicated that CRS did not want to continue with the restoration project. 15. Mr. Fletcher testified that he was present when CRS suggested that a total electrical re-wire was required for Complainants’ residence. Mr. Fletcher stated that Mr. Willis stated that the work might have to be performed without the required electrical permits. Mr. Fletcher testified that CRS abandoned the construction project by failing to provide detailed invoices. 16. Complainant Sara Fletcher (hereinafter “Ms. Fletcher”) testified that CRS made it impossible for Complainants to move forward with the restoration project on their residence because CRS would not provide detailed invoices that Complainants requested. Ms. Fletcher stated that CRS’s work on Complainants’ residence was not completed. 17. Ms. Fletcher testified that Complainants terminated CRS from the construction project in an attempt to force CRS to provide the requested detailed invoices. Ms. Fletcher stated that she repeatedly asked CRS for full disclosure. 18. Ms. Fletcher testified that CRS departed from applicable building codes by suggesting that electrical work be performed on Complainants’ residence without the required electrical permits. 19. Ms. Fletcher testified that CRS failed to display its license number with the acronym “ROC” in its emails to Complainants. Ms. Fletcher testified that Mr. Jackson represented himself to be an independent insurance adjuster. 20. Ms. Fletcher testified that CRS failed to provide the minimum elements of a contract in the Work Authorization and Agreement provided by CRS. Ms. Fletcher stated that there was no dollar amount and no estimated date of completion in the written Work Authorization and Agreement. 21. Mr. Jackson testified that he represented CRS in formulating the Work Authorization and Agreement with Complainants. Mr. Jackson stated that CRS agreed to work with Complainants’ insurance company to get an estimate of the true cost of repairing Complainants’ home. 22. Mr. Jackson testified that there was no final dollar amount in the Work Authorization and Agreement because there was no approved scope of work from Complainants’ insurance company when the agreement was made. Mr. Jackson stated that it was impossible to obtain a final dollar amount on the final cost of the restoration project when the Work Authorization and Agreement was made. 23. Mr. Jackson stated that fire restoration contracts never have a final dollar amount because it is always uncertain what the approved scope of work will be. Mr. Jackson stated that initially Complainants’ insurance company had approved approximately $30,000.00 for the restoration project. Mr. Jackson stated that CRS was able to get Complainants’ insurance company to increase the scope of the restoration project to over $120,000.00. 24. Mr. Jackson stated that in March or April 2012, someone other than CRS performed demolition work at Complainants’ residence. Mr. Jackson stated that the effect of the extra demolition work performed by someone other than CRS added approximately $50,000.00 to the cost of rebuilding Complainants’ residence. 25. Mr. Whetten testified that the effect of Complainants’ unapproved demolition work on their residence increased the scope of the reconstruction work on their residence substantially. Mr. Whetten stated that CRS had not obtained a construction permit for the re-build of Complainants’ residence because CRS had not started the building portion of the restoration project. 26. Mr. Whetten testified that local building authority was expediting “Monument Fire” permits so that the work on so many construction projects would take place as “expeditiously as possible.” Mr. Whetten stated that the local building authority was not requiring permits to start restoration projects and was requesting that contractors obtain permits when inspections were required. 27. Mr. Willis testified that CRS did not inform Complainants that CRS would not complete the restoration project. Mr. Willis stated that CRS was terminated from the restoration project by Complainants in April 2012. Mr. Willis acknowledged that he informed Complainants that they could, as homeowner-builders, perform some electrical work on their residence without a required electrical permit. Mr. Willis testified that he informed Complainants that he would not “feel comfortable with it” and that he did not recommend it to Complainants. 28. Mr. Willis stated that until Complainants terminated CRS from the restoration project, CRS was willing to work with Complainants to complete the project within the scope of work that would ultimately be approved by Complainants’ insurance company. 29. Administrative notice is taken of CRS’s prior license record as reflected on the Registrar of Contractors’ public website on October 22, 2012. Such prior license record reflects that License No. KB-2.222083-D of CRS is current. License No. KB-2.222083-D of CRS was on probation from October 29, 2011, through April 26, 2012, and was suspended from September 28, 2011, through October 28, 2011. 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. Complainants performed extra demolition work on their residence. CRS asserted that the extra demolition work performed by Complainants dramatically increased the cost of the restoration project. The parties then became embroiled in a financial dispute, leading Complainants to terminate CRS from the restoration project on April 19, 2012. CRS was willing to comply with the terms of the Work Authorization and Agreement until it was terminated from the restoration project. Complainants failed to sustain the requisite burden of proving that CRS abandoned or refused to perform work without legal excuse for the abandonment or refusal. This Tribunal concludes that Complainants failed to meet their burden of proof to establish a violation by CRS of the charged provision of A.R.S. § 32-1154(A)(1).[2] 4. There was no credible evidence that CRS departed from or disregarded plans or specifications or any building codes in any material respect in the construction work that CRS performed as part of the restoration project on Complainants’ residence. This Tribunal concludes that Complainants failed to meet their burden of proof to establish a violation by CRS of the charged provision of A.R.S. § 32-1154(A)(2).[3] 5. CRS failed to display its license number with the acronym “ROC” in its written electronic communications with Complainants. This Tribunal concludes that CRS violated the charged provision of A.R.S. § 32- 1154(A)(13), namely, A.R.S. § 32-1124(B).[4] 6. There was no dollar amount, no estimated date of completion, and no written notification that the property owner had the right to file a written complaint with the Registrar of Contractors for a possible violation of A.R.S. § 32-1154(A) in the written Work Authorization and Agreement. Respondent asserts that it would be impossible for a contractor to insert a final dollar amount and an estimated date of completion in a fire and smoke restoration contract because the final dollar amount and estimated date of completion are dependent upon actions by a homeowner’s insurance company. However, there is no provision in A.R.S. § 32-1158 which provides an exemption for fire and smoke remediation contracts. This Tribunal concludes that CRS violated the charged provision of A.R.S. § 32-1154(A)(13), namely, A.R.S. § 32- 1158.[5]

RECOMMENDed order In view of the foregoing, it is recommended that commencing on the effective date of the Registrar’s Order, License No. KB-2.222083-D of CRS shall be suspended until the Registrar of Contractors receives and accepts written proof that Respondent has brought its electronic communications and written contracts into full compliance with the applicable provisions of A.R.S. § 32-1124(B) and A.R.S. § 32-1158. It is further recommended that if Respondent fully accomplishes the above described corrective action on or before the effective date of this Order, then the above-provided License suspension shall not take place and that this matter shall be closed. 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, October 22, 2012.

/s/ M. Douglas Administrative Law Judge Transmitted electronically to: William A. Mundell, Director Registrar of Contractors

----------------------- [1] See Exhibit No. R-12 (April 19, 2012 email to CRS from Complainants). [2] A.R.S. § 32-1154(A)(1) includes among the grounds for disciplinary action against a contractor’s license, abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal. [3] A.R.S. § 32-1154(A)(2) includes among the grounds for disciplinary action against a contractor’s license, 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. [4] A.R.S. § 32-1124(B) provides, in pertinent part, as follows:

Licenses issued under this chapter and any renewals shall be signed by the registrar or the registrar's designated representative and by the licensee. The license shall be nontransferable, and satisfactory evidence of possession shall be exhibited by the licensee upon demand. The license number appearing on any licenses held by the licensee shall be preceded by the acronym "ROC" and shall be posted in a conspicuous place on premises where any work is being performed, shall be placed on all written bids submitted by the licensee and shall be placed on all broadcast, published, internet or billboard advertising, letterheads and other documents used by the licensee to correspond with the licensee's customers or potential customers in the conduct of business regulated by this chapter. A violation of this subsection relating to posting and placement of license numbers shall be, at the discretion of the registrar, grounds for disciplinary action pursuant to section 32-1154, subsection A, paragraph 13, but not grounds for preventing the award of a contract, voiding an awarded contract, or any other claim or defense against the licensee. For the purposes of this subsection, advertising does not include a trade association directory listing that is distributed solely to the members of the association and not to the general public.

[5] A.R.S. § 32-1158 provides, in pertinent part, as follows: A. From and after December 31, 1992 until December 31, 2007, any contract in an amount of more than one thousand dollars and less than one hundred fifty thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information: 1. The name of the contractor and the contractor's business address and license number. 2. The name and mailing address of the owner and the jobsite address or legal description. 3. The date the parties entered into the contract. 4. The estimated date of completion of all work to be performed under the contract. 5. A description of the work to be performed under the contract. 6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. 7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner. 8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract. B. From and after December 31, 2007, any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information: 1. The name of the contractor and the contractor's business address and license number. 2. The name and mailing address of the owner and the jobsite address or legal description. 3. The date the parties entered into the contract. 4. The estimated date of completion of all work to be performed under the contract. 5. A description of the work to be performed under the contract. 6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. 7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner. 8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract. 9. That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar's telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32-1155, subsection A. The information in this paragraph must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor or the contractor's designated representative. This paragraph does not apply to a person who is subject to and complies with section 12-1365. C. At the time of signing a contract the owner shall be provided a legible copy of all documents signed and a written and signed receipt for and in the true amount of any cash paid to the contractor by the owner. D. The requirements of this section shall not constitute prerequisites to the formation or enforcement of a contract. Failure to comply with the requirements of this section shall not constitute a defense by either party to an action for compensation, damages, breach, enforcement or other cause of action based on the contract.

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