ALJDEC decisions subject to certification as final

2012A-3289-ROC · Registrar of Contractors · 2013-08-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 29, 2013, at 1:00 p.m. APPEARANCES: J L K Real Estate Investment Corp (hereinafter “Complainant”) appeared through its president, Joel L. Kaplan. K C Air Conditioning Inc. (hereinafter “KC”) appeared through its Qualifying Party, Kyle Dennis Cramer. 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 KC is the holder of License Nos. L-39.129613-C and C-39R.129614-R issued by the Registrar of Contractors. This is a residential matter where KC entered into a contract with Complainant to replace an air handler on Complainant’s rental property located at 4211 E. Palm Lane, Unit 113, Phoenix, Arizona, for the sum of $1,600.00. KC completed the agreed upon construction work and requested payment from Complainant, along with an additional $75.00 that Complainant owed KC for work that it had previously performed for Complainant. The parties were unable to resolve their differences regarding the amount of payment and KC removed portions of the new air handler from Complainant’s rental property. Complainant was dissatisfied with KC’s actions and filed a formal Complaint against KC with the Registrar of Contractors. The parties were unable to resolve their differences and Complainant requested that a formal Citation be issued against KC’s contractor’s license. The Registrar of Contractors then issued a formal Citation and Complaint against License No. L-39.129613-C of KC. KC moved to dismiss the Citation and Complaint on the basis that KC was using its C-39R.129614-R license for the residential project, not its L-39.129613-C commercial license. The Registrar of Contractors granted KC’s motion to dismiss and quashed the first Citation and Complaint. On or about March 26, 2013, the Registrar of Contractors issued a new Citation and Complaint against License Nos. L-39.129613-C and C-39R.129614- R of KC, charging KC with possible violations of A.R.S. § 32-1154(A)(1),[1] A.R.S. § 32-1154(A)(13), namely A.R.S. § 32-1124(B),[2] A.R.S. § 32- 1154(A)(13), namely, A.R.S. § 32-1158(B),[3] and A.R.S. § 32- 1154(A)(21).[4] Testimony of Joel L. Kaplan Complainant’s president, Joel L. Kaplan (hereinafter “Mr. Kaplan”), testified that on June 20, 2012, he entered into a construction agreement with KC for the installation of a new air handler in a condominium that his company owned for $1,600.00.[5] Mr. Kaplan stated that the tenant of the condominium failed to leave a key and there was a small delay of 10 or 15 minutes before KC was able to get into the interior of the condominium. Mr. Kaplan testified that during the early part of the day, KC’s Qualifying Party, Kyle Dennis Cramer (hereinafter “Mr. Cramer”), called and informed him that KC had discovered an old invoice for $75.00 that Complainant had failed to pay three years earlier.[6] Mr. Kaplan testified that Mr. Cramer then demanded immediate cash payment in the sum of $1,675.00 for installation of the new air handler and for payment of the old invoice. Mr. Kaplan stated that he informed Mr. Cramer that immediate cash payment was not part of their contract. Mr. Kaplan testified that at that point Mr. Cramer went “ballistic.” Mr. Kaplan testified that KC completed the installation of the new air handler about 1:00 or 2:00 p.m. Mr. Kaplan stated that Mr. Cramer informed him that payment had to be made immediately. Mr. Kaplan testified that he arrived at the condominium at about 5:00 p.m. and discovered that KC had rendered the newly installed air handler inoperable. Mr. Kaplan testified that KC removed pieces from the new air handler and the old air handler from the condominium. Mr. Kaplan stated that KC left the tenant of the condominium with no air conditioning in the middle of the summer in Phoenix. Mr. Kaplan testified that he contacted KC and requested that KC return and re-install the missing pieces to the new air handler. Mr. Kaplan testified that KC wanted additional money above the $1,675.00 to return and re-install the air handler. Mr. Kaplan stated that he was unable to reach an agreement with KC. Mr. Kaplan testified that the next day he retained a different HVAC contractor to get the air handler working at the condominium. Mr. Kaplan testified that he then demanded the return of the old air handler that KC had removed from the condominium. Mr. Kaplan stated that KC demanded that it be paid in full for its work at the condominium and for the previous unpaid invoice in the sum of $75.00. Mr. Kaplan testified that KC also demanded the return of the air handler parts that KC had left at the condominium. Mr. Kaplan testified that he then contacted the local police department and the police negotiated the return of the old air handler to Complainant. Mr. Kaplan stated that in August 2012, he met with Mr. Cramer in a parking lot and exchanged the air handler parts that KC had left at the condominium for the old air handler that KC had removed from the condominium.[7] Mr. Kaplan testified that the parties developed a very antagonistic personal relationship and that Mr. Cramer made offensive personal remarks about Mr. Kaplan.[8] Testimony of Kyle D. Cramer Mr. Cramer testified that Mr. Kaplan contacted him for the installation of a new air handler in one of Complainant’s condominiums. Mr. Cramer stated that the installation of the new handler in the condominium was delayed for more than two hours because the tenant failed to leave a key for the condominium. Mr. Cramer testified that KC gained access to the condominium and completed the agreed-upon installation work by approximately 3:00 p.m. and requested payment for KC’s completed work. Mr. Cramer testified that the parties had specifically agreed that KC would be paid in full for its work once the construction project was completed. Mr. Cramer stated that Mr. Kaplan refused to provide a credit card and offered to pay by check. Mr. Cramer stated that Mr. Kaplan kept getting “sketchy” about where KC could pick up the promised check for the completed construction work. Mr. Cramer stated that due to his concern about Complainant’s payment, he checked with his daughter, the office manager for KC, and his daughter informed him that Mr. Kaplan had failed to pay KC for work that it had performed three years earlier. Mr. Cramer testified that KC had sent the old invoice to collection and was unable to collect the money from Mr. Kaplan. Mr. Cramer testified that he contacted Mr. Kaplan and demanded payment “today” in the amounts of $1,600.00 for the new air handler installation and $75.00 for the unpaid invoice. Mr. Cramer stated that Mr. Kaplan said he was agreeable and that KC could come by his office and pick up a check in the total amount of $1,675.00. Mr. Cramer testified that when the work on the new air handler was completed, he attempted to contact Mr. Kaplan on his mobile phone and that Mr. Kaplan informed him that he was in Mesa and not available. Mr. Cramer testified that he informed Mr. Kaplan that KC had employees “all over the valley” and would meet him in Mesa to pick up the check. Mr. Cramer stated that Mr. Kaplan informed him that he was unavailable to meet with KC. Mr. Cramer testified that he then instructed his employees to disable the air handler. Mr. Cramer testified that he disabled the air handler because he knew that once he left the property, his only recourse would be legal action. Mr. Cramer stated that Mr. Kaplan had already “got him” for $75.00 three years earlier and that he was determined that Mr. Kaplan would not “get him again” for the $1,600.00 for the installation of the new air handler. Mr. Cramer testified that KC had provided Mr. Kaplan with repeated opportunities to pay for the installation of the new air handler. Mr. Cramer testified that Mr. Kaplan contacted him about 6:30 p.m. and offered to meet KC at the jobsite and to provide KC with a check once the air handler was restored to operation. Mr. Cramer stated that he informed Mr. Kaplan that his employees had already gone home and that Mr. Kaplan would have to agree to pay the employees overtime for them to return to the condominium to install the missing parts to the new air handler. Mr. Cramer testified that Mr. Kaplan refused to pay the additional labor costs. Mr. Cramer testified that he then received a text from Mr. Kaplan informing him that KC should not return to the condominium because police would be contacted if KC attempted to return to the condominium. Mr. Cramer stated that Mr. Kaplan had someone else install a new blower assembly in the air handler for the condominium. Mr. Cramer acknowledged that KC had failed to place its contractor’s license number on the written estimate and the written invoice that it had provided to Complainant. Mr. Cramer acknowledged that the written estimate provided to Mr. Kaplan did not contain a statement that the property owner had a right to file a complaint with the Registrar. Mr. Cramer testified that his computer program did not contain a statement that the property owner has a right to file a written complaint with the Registrar for a violation of A.R.S. § 32- 1154(A), along with the Registrar’s telephone number and website address. Mr. Cramer denied any knowledge of an alleged violation of A.R.S. § 32- 1154(A)(21). Mr. Cramer denied that KC had a person named on License No. L- 39.129613-C and License No. C-39R.129614-R that was named on any other license in the State of Arizona or any other state that is under suspension or revocation. Mr. Cramer testified that KC was operating under its residential license when it was working on Complainant’s air handler. Mr. Cramer testified that he is a “very easy going person.” Mr. Cramer stated that Mr. Kaplan was very difficult to deal with. Mr. Cramer stated that it was not necessary to involve the local police department in the dispute. Administrative notice is taken of KC’s prior license records as reflected on the Registrar of Contractors’ public website on August 6, 2013. Such prior license records reflect that License No. L-39.129613-C of KC and License No. C-39R.129614-R of KC are 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. KC disabled the newly installed air handler and abandoned the construction project when Complainant failed to comply with KC’s demand that Complainant immediately pay KC $1,600.00 for the installation of the new air handler and another $75.00 for a three-year-old invoice for a different construction project. When Complainant offered to provide a check for the $1,675.00, KC demanded that Complainant agree to pay KC’s employees overtime for the additional work that would be required to make the newly installed air handler operational. The parties’ written construction agreement does not provide for immediate payment of $1,675.00 once the work is complete. This Tribunal concludes that KC violated the charged provision of A.R.S. § 32-1154(A)(1). 4. KC’s Estimate No. 2037 and KC’s Invoice No. 51195 do not properly display KC’s contractor’s license number. This Tribunal concludes that KC violated the charged provision of A.R.S. § 32-1154(A)(13), namely, A.R.S. § 32-1124(B). 5. KC’s Estimate No. 2037 does not contain a statement that the property owner has a right to file a written complaint with the Registrar for a violation of A.R.S. § 32-1154(A) or the Registrar’s telephone number and website address. This Tribunal concludes that KC violated the charged provision of A.R.S. § 32-1154(A)(13), namely, A.R.S. § 32-1158(B). 6. The Complaint has been filed against KC and all KC’s Licenses. Should the Registrar suspend or revoke any of KC’s Licenses, such conduct and circumstances would constitute a violation of this section and all KC’s other licenses would also be disciplined. 7. There was no credible evidence that KC had a person named on License No. L-39.129613-C and/or License No. C-39R.129614-R that was named on any other license in the State of Arizona or any other state that is under suspension or revocation. This Tribunal concludes that Complainant failed to meet its burden of proving by a preponderance of the evidence that KC violated the charged provision of A.R.S. § 32-1154(A)(21). RECOMMENDed order In view of the foregoing, it is recommended that commencing on the effective date of the Registrar’s final Order, License No. L-39.129613-C of KC and License No. C-39R.129614-R of KC shall be suspended until the Registrar of Contractors receives and accepts written proof that KC has brought its written invoices, estimates, and contracts to within full compliance with the provisions of A.R.S. § 32-1124(B) and A.R.S. § 32- 1158(B). It is further recommended that if on or before the effective date of this Order, KC provides acceptable written proof that that KC has brought its written invoices, estimates, and contracts to within full compliance with the provisions of A.R.S. § 32-1124(B) and A.R.S. § 32-1158(B), then the above provided License suspensions shall not take place and that, instead, License No. L-39.129613-C of KC and License No. C-39R.129614-R of KC shall be placed on disciplinary probation for a period of thirty (30) days. 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 12, 2013.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors

----------------------- [1] 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. [2] A.R.S. § 32-1154(A)(13) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in any material respect to comply with this chapter.” 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.

[3] A.R.S. § 32-1158(B) provides as follows:

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.

[4] A.R.S. § 32-1154(A)(21) includes among the grounds for disciplinary action against a contractor’s license, having a person named on the license who is named on any other license in this state or in another state which is under suspension or revocation unless the prior revocation was based solely on a violation of this paragraph. [5] See Exhibit No. C-1 (6/21/12 Estimate). [6] See Exhibit No. C-2 (7/24/09 Invoice for $75.00). [7] See Exhibit No. C-4 (8/3/12 Receipt for Equipment). [8] See Exhibit No. C-6 (6/27/12 Email).

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