ALJDEC decisions subject to certification as final

2012A-3700-ROC · Registrar of Contractors · 2013-08-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 5, 2013, at 8:00 a.m. APPEARANCES: Solot Properties, an Arizona general partnership consisting of the RAME Family, LLC and the Solot Family Residuary Trust (hereinafter “Complainant”) appeared through its members, Michael Solot and Alan R. Solot, Esq. Innovative Design & Construction LLC (hereinafter “Innovative” or “contractor”) appeared through its attorney, Corey B. Larson, Esq., Waterfall, Economidis, Caldwell, Henshaw and Villamana, P.C.

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 Innovative is the holder of License No. KB-1.273809-D issued by the Registrar of Contractors. This is a commercial matter where Innovative entered into a construction agreement with Complainant to remodel a commercial property located at 4662 Speedway, Tucson, Arizona 85711 (hereinafter the “rental property”), for the total sum of $26,447.00. Innovative contracted to perform demolition, repair, electrical, plumbing, HVAC, and painting work on the rental property. Innovative failed to complete the work required by the construction agreement in a timely manner and Complainant became concerned with Innovative’s reliability. Complainant discovered that Innovative had failed to obtain a required construction permit for the construction project. Complainant demanded that Innovative obtain a construction permit and properly complete the construction project. When Innovative failed to comply with Complainant’s demand, Complainant filed a formal Complaint against Innovative with the Registrar of Contractors. Pursuant to the filing of the formal Complaint, an assigned Registrar Inspector, Mike Nieves (hereinafter “Inspector Nieves”), conducted an onsite inspection. Inspector Nieves issued a written Corrective Work Order on August 31, 2012, directing Innovative to perform designated corrective work on Complainant’s rental property. The Corrective Work Order provided, in relevant part, as follows: License #273809 issued to Innovative Design and Construction was suspended for Lack of Bond on 08/14/12 and cannot do or sub- contract the following corrective work until the suspension is lifted.

Contractor to correct the following by appropriate means and per All Plans, Specifications and Adopted Building Codes:

1. Contractor failed to pull permits; the City of Tucson has not inspected nor approved the remodeling: No permit has been obtained, will call City of Tucson Building department.

2. Contractor asked to do a “walkthrough” final inspection and said that job was complete when job was not complete: Per the respondent he has not completed the project.

3a. Contractor recommended and agreed to install an HVAC return on the west side of the property: Return installed needs to be sized for area.

3b. Contractor reneged on such agreement and failed to install an HVAC return on the west side of the property: Return installed needs to be sized for area.

4. Contractor abandoned the job, but then seems to have done more work: Respondent continues to work on project.

5. Contractor was asked to provide warranty for HVAC system installed but request is ignored; no warranty has been provided: No warranty has been provided.

6a. Contractor was asked to provide warranty for roof repair and recoat (for which a subcontractor was hired) but request is ignored; no warranty has been provided: No warranty has been provided.

6b. Contractor stated that ponding on roof is resolved but ponding remains: There is evidence of ponding water in 2 areas, around east side south of HVAC unit and on west side approximate 25 feet from front parapet wall.

7. Roof leaks; Contractor has painted over evidence of roof leak but failed to inform if leak is repaired: Attempt has been made to repair leak at south east corner of building, interior ceiling has water stain.

8. All Glass, LLC issued a Preliminary Twenty Day Lien Notice. Contractor was requested that a copy of the agreement, invoice, bill, etc with All Glass be provided; no response to this request was made: I lack jurisdiction.

9. Contractor has failed to provide a conditional waiver and release from All Glass, LLC as required by the Preliminary Twenty Day Lien Notice but claims that the job is complete: I lack jurisdiction.

10. Contractor was hired in December, 2011. The job should have been completed in 30 days or perhaps 60. Contractor has failed to comply with several completion deadlines agreed to by Contractor: Project needs to be completed.

11. Contractor has caused lost rental income since failed to timely complete job: I lack jurisdiction.

Addendum:

I. East Half

1. Paint touch up thru out: Per the complainant not an issue.

2. Where the grid meets the hard lid ceiling there is workmanship concerns: Needs to be corrected.

3. At the registers for the HVAC the ceiling tiles are sliced in two: Needs to be corrected.

4. East west wall shows on plans to be demolished and it was left existing: Per the complainant not an issue.

5. Sheet D1 Keynotes 4, 5, 10 and 13 shows to remove all of these existing walls and ceilings. The most southern room shows on the RCP plan to receive a new acoustic ceiling and to demo the existing hard lid ceiling. The hard lid ceiling remains and the acoustic ceiling is not installed: Walls and ceilings have not been removed, as per plans.

6. Southern most room calls for two new 2 x 4 light fixtures, they are not installed: Have not been installed, as per plans.

7. New door at restroom is to swing out per the plans and instead swings into the restroom; this could be an ADA issue: Door swings into bathroom plans call for door to swing out.

8. West demising wall has a significant crack; cause unknown at this time: Vertical crack on interior west wall in east side of building needs to be properly corrected.

9. Termite damage at west demising wall at wall base (not part of contract): Per the complainant not an issue.

10. The permitted plans do not show any HVAC work, however a new HVAC unit has been installed on the roof with duct work above the roof penetrating into the space, Whether or not this unit has the proper structural supports in place is unknown. A licensed HVAC subcontractor and/or engineer should review the work in place for code compliance and proper function, as well as structural concern as to its installation on the roof: Needs to be properly installed.

11. From a visual inspection, the return air in the south room is not properly located and the thermostat should be in a more central location: Needs to be placed in correct location.

12. Confirm whether or not the trap for the lay sink at the ADA restroom is code compliant. It may require an insulation wrap for ADA: Will verify.

13. Verify commode flush is ADA compliant: Will verify.

14. Both grab bars appear to be used and not new, the plans call for new grab bars: I could not determine if grab bars are used.

II. West Half

1. Plans call for door between west and east half to be removed, it remains in place: Needs to be removed, as per plans.

2. Plans call for a new door Keynote 4 at two locations and there are no new doors at these locations: Need to install doors, as per plans.

3, Keynote 6 calls for a new door, the existing doors remains [sic]: Need to install new door, as per plans.

4. Existing floor in the southern most room and part of the central room still remains. Demolition Keynote 10 calls for the floor to be removed: Several existing tiles need to be removed.

5. At east west wall a new door has been installed, however it is 32” x 6’ [5]” and the plans call for a new 36” x 6’8” door: Correct door needs to be installed, as per plans.

6. The HVAC supply register appears to be the existing swamp cooler register in place and is not appropriate for a commercial HVAC supply register: Correct register needs to be installed.

7. There is a very small supply register in the central room, which does not appear to be adequate air flow: Supply register needs to be sized for room area.

8. In the restroom there is light switch at approximately 60” which does not appear to operate a light: Per the complainant not an issue.

9. There is no exhaust fan in this restroom, however there is more shown on the plans: Needs to be installed, as per plans.

10. There is no HVAC return anywhere on this west half of the facility: Return has been installed, needs to be sized for area.

11. The northern most space on this half per the RCP plan Keynotes & 7 shows the existing ceiling was to be demolished and a new 2 x 4 acoustic ceiling and two new light fixtures to be installed. None of this work was executed: Needs to be completed as per plans.

12. Middle space RCP plan Keynote 8 requires for the existing ceiling fan to be removed and replaced with a new light fixture. The ceiling fan remains: Needs to be completed as per plans.

13a. The exterior door is not painted: Corrected by the respondent prior to the jobsite.

13b. Missing all weather stripping and bumpers: Weather stripping and bumpers need to be installed.

Ill. Building Exterior

1. The newly constructed wall above the existing sign structure at the north wall has a crack in the stucco: Horizontal crack about inches below top.

2. Details 1, 2, 3 & 4 on Sheet A4 for the structural requirements of the extension bracing at this newly constructed wall are not per the plans and are a significant structural concern: Plans call for 4 inch x 4 inch x1/4 inch angle iron.

3. Sheet D1 Keynote 6 calls for the complete removal and demolition of the overhead carport and roof structure. This has been left in place: Per the complainant not an issue.

4. The storefront system which was installed on the east half showed no evidence of tempered glass and it is unknown at this point whether or not this is a requirement for code compliance. Additionally, it is my understanding in speaking with the owner the new glass storefront shown on the plans has been modified with the owner’s approval to a framed wall and stucco at the west area of this same wall: Glass does not show tempered etching, as per code.

IV. Roof

1a. According to the executed proposal the roof was to be repaired and recoated. It does not appear that the coating on the roof is new: There is evidence of ponding water in 2 areas, around east side south of HVAC unit and on west side approximate 25 feet from front parapet wall.

1b. There are several areas where coating has not been applied around HVAC penetrations and curbs: Needs to be coated.

2. There is an exposed open electrical box on the roof: Corrected by the respondent prior to the jobsite.

3. The new HVAC unit does not have any condensate with appropriate P trap installed. Note as indicated previously there is no mechanical work of any sort shown on the drawings: Corrected by the respondent prior to the jobsite.

4. The new duct work on the roof does not appear to be properly painted and sealed at several locations: Corrected by the respondent prior to the jobsite.

5. There are two low spots on the roof which show evidence of ponding water: There is evidence of ponding water in 2 areas, around east side south of HVAC unit and on west side approximate feet from front parapet wall.

The parties were unable to resolve their differences and Complainant requested that a formal Citation be issued against Innovative. On April 11, 2013, the Registrar of Contractors issued a Citation and Complaint charging Innovative with possible violations of A.R.S. § 32-1154(A)(1),[1] A.R.S. § 32-1154(A)(2),[2] A.R.S. § 32-1154(A)(3),[3] namely, A.A.C. R4-9- 108,[4] A.R.S. § 32-1154(A)(13), namely, A.R.S. § 32-1124(B),[5] A.R.S. § 32-1154(A)(18),[6] and A.R.S. § 32-1154(A)(23).[7] Testimony of Inspector Nieves Inspector Nieves testified that he performed a pre-hearing inspection at Complainant’s rental property on July 29, 2013. Inspector Nieves stated that Innovative failed to obtain a construction permit from the City of Tucson. Inspector Nieves testified that Item Nos. 3a (HVAC return) and 3b (proper sizing of HVAC return) of the Corrective Work Order had not been corrected. Inspector Nieves testified that Innovative failed to comply with Item No. 5 (provide warranty for HVAC system) of the Corrective Work Order. Inspector Nieves stated that Innovative failed to comply with Item No. 6a (provide warranty for roof repairs) of the Corrective Work Order. Inspector Nieves stated that Item No. 6b (repair to parapet wall) had been corrected by Complainant. Inspector Nieves testified that Item No. 7 (roof leaks) had been corrected by Complainant. Inspector Nieves stated that Item No. 10 (completion of construction project) had been corrected by Complainant. I: East Half of Rental Property Inspector Nieves testified that Innovative failed to complete the construction project as directed in the Corrective Work Order. Inspector Nieves stated that Item No. 2 (correction of area where grid meets hard lid ceiling) of the Complaint Addendum (hereinafter “addendum”) was corrected by Complainant. Inspector Nieves testified that Item No. 3 (correction of ceiling tiles) of the addendum was corrected by Complainant. Inspector Nieves testified that Item No. 5 (installation of acoustic ceiling) of the addendum had not been corrected. Inspector Nieves stated that Item No. 6 (installation of light fixtures per plan) of the addendum had been corrected by Complainant. Inspector Nieves testified that Item No. 7 (installation of door that swings out) of the addendum had not been corrected. Inspector Nieves testified that Item No. 8 (correction of crack in interior west wall) of the addendum had been corrected by Complainant. Inspector Nieves stated that Item No. 10 (HVAC work) of the addendum had been corrected by Complainant. Inspector Nieves testified that Item No. 11 (re- locating return air vent and thermostat) of the addendum had been corrected by Complainant. Inspector Nieves testified that Innovative had failed to comply with Item Nos. 12 and 13 (correct restroom to comply with applicable ADA code requirements) of the addendum. Inspector Nieves stated that Item Nos. 12 and 13 had not been corrected. II: West Half of Rental Property Inspector Nieves testified that Innovative failed to comply with Item No. 1 (removal of door between west and east halves of the rental property). Inspector Nieves stated that Innovative failed to comply with Item Nos. 2 and 3 (installation of new doors). Inspector Nieves stated that Item Nos. 1, 2, and 3 had not been corrected. Inspector Nieves testified that Item No. 4 (removal of existing floor tiles) had been completed by Complainant. Inspector Nieves stated that Innovative failed to comply with Item No. 5 (installation of correct size of door). Inspector Nieves testified that Innovative failed to comply with Item No. 6 (correction of HVAC supply register). Inspector Nieves testified that Item No. 7 (supply register) was accepted by Complainant. Inspector Nieves stated that Item No. 8 (exhaust fan in bathroom) and Item No. 10 (correction of HVAC return) had been corrected by Complainant. Inspector Nieves testified that Innovative failed to correct Item No. 11 (removal of existing ceiling and replacement with two new light fixtures), Item No. 12 (removal of ceiling fan and replacement with ceiling light), and Item No. 13b (missing weather stripping). Inspection Nieves stated that Item Nos. 11 and 12 had not been corrected. Inspector Nieves testified that Item No. 13b has been corrected by Complainant. III: Building Exterior Inspector Nieves testified that Item No. 1 (stucco crack) and Item No. 2 (installation of angle iron) had been corrected by Complainant. Inspector Nieves stated that Innovative had corrected Item No. 4 (tempered etching on storefront glass). IV: Roof Inspector Nieves testified that Item No. 1 (repair and recoating of roof) had been corrected by Complainant. Inspector Nieves stated that Item No. 1b (roof coating) had been corrected by Complainant. Inspector Nieves testified that Item No. 5 (ponding water) had been corrected by Complainant. Inspector Nieves testified that during his first onsite inspection, Innovative indicated that it had not seen the architect’s plans for the remodeling project. Inspector Nieves testified that Innovative failed to list its license number on one of the documents provided to the Registrar of Contractors by Complainant. Inspector Nieves stated that the document was received by the Registrar of Contractors on August 30, 2012. Inspector Nieves testified that the date of the parties’ written contract was December 22, 2011. Inspector Nieves stated that the Complaint was filed with the Registrar of Contractors on July 26, 2012. Inspector Nieves testified that the document that was received on August 30, 2012, may have been a subsequent page of correspondence that had Innovative’s contractor’s license number on the first page of the document. Inspector Nieves stated that as far as “he could recall” the rest of Innovative’s documentation and correspondence properly displayed Innovative’s contractor’s license number. Inspector Nieves’ testimony is found to be credible. Testimony of Andrew Evan Karic Andrew Evan Karic (hereinafter “Mr. Karic”) testified that he was a construction expert.[8] Mr. Karic stated that he had reviewed the plans and specifications for the construction project at Complainant’s rental property. Mr. Karic testified that he spent several hours personally examining the construction work that Innovative performed on Complainant’s rental property. Mr. Karic testified that he observed numerous areas of construction that were incomplete and prepared a written report for Complainant.[9] Mr. Karic stated that there is between $15,000.00 to $20,000.00 worth of construction work that remains to be completed at Complainant’s rental property. Mr. Karic testified that the largest single item was Innovative’s failure to remove the “hard” ceiling and replacing it with a “dropped” ceiling. Mr. Karic testified that there was no construction permit from the local building authority onsite. Mr. Karic stated that the construction work performed by Innovative was performed without a required construction permit. Mr. Karic testified that there had been no inspections by the local building authority because Innovative had failed to obtain a required construction permit. Mr. Karic stated that the roof for Complainant’s rental property did not appear to have been reconstructed or even recoated. Mr. Karic testified that Innovative failed to comply with approved plans and specifications. Mr. Karic testified that the approved plans and specifications do not show any HVAC work. Mr. Karic stated that the support system for the parapet wall on Complainant’s property did not comply with approved plans and specifications and was not structurally sound. Mr. Karic testified that a licensed HVAC subcontractor and a structural engineer should be retained to inspect the HVAC installation on Complainant’s roof. Mr. Karic acknowledged that he had known Innovative’s employee, David Williamson (hereinafter “Mr. Williamson”), for a number of years. Mr. Karic acknowledged that he had been involved in litigation with Mr. Williamson in the past. Mr. Karic denied that he had any personal animosity towards Mr. Williamson. Mr. Karic testified that he examined a City-approved set of plans for Complainant’s rental property on July 19, 2012, before he conducted his inspection. Mr. Karic stated that in addition to deviations from plans and specifications, he observed and documented numerous areas of unworkmanlike construction. Mr. Karic acknowledged that he performed his inspection with the assumption that Innovative had contracted to perform construction work in accordance with the City-approved plans and specifications. Mr. Karic acknowledged that “there were a few items” in the approved plans and specifications that were not required by Complainant. Mr. Karic testified that Complainant informed him that it was not going to demolish the existing carport during Mr. Nieves’ onsite inspection. Mr. Karic stated that Complainant also indicated that it did not want a wall between the east and west sides of the rental property demolished. Mr. Karic testified that he saw nothing in the approved plans and specifications regarding HVAC work. Mr. Karic testified that there was nothing in the parties’ written agreement regarding HVAC work on the Complainant’s rental property. Mr. Karic acknowledged that he did not know the terms of any oral agreement that the parties may have entered into regarding the HVAC work. Testimony of Gus Roumbos Gus Roumbos (hereinafter “Mr. Roumbos”) testified that he is a registered architect and the owner of Roumbos Architecture. Mr. Roumbos stated that he was the architect who prepared the architectural plans (the “plans”) for Complainant’s remodeling project. Mr. Roumbos testified that the City of Tucson approved the plans for the construction project on July 19, 2011. Mr. Roumbos testified that he provided an approved set of plans to Innovative and “walked” the project with Mr. Williamson prior to Innovative’s bid submittal. Mr. Roumbos stated that he offered to answer any questions that Innovative might have had. Mr. Roumbos testified that he also provided a set of plans to three other contractors. Mr. Roumbos stated that three of the bids were in the same forty-thousand-dollar range as Innovative’s bid and that the fourth bid was substantially higher. Mr. Roumbos testified that Complainant’s rental property could not have been leased in the condition that he observed when he first visited the construction site. Mr. Roumbos stated that building was a mess. Mr. Roumbos stated that the purpose of the plans that he prepared was to bring Complainant’s rental property to an acceptable standard so that a potential tenant could envision the potential of the property. Mr. Roumbos testified that the plans called for an existing air conditioning system to be removed. Mr. Roumbos stated that the plans also called for the removal of an existing evaporative cooler system on Complainant’s property. Mr. Roumbos testified that the plans did not call for the installation of a replacement HVAC or evaporative cooling system. Mr. Roumbos testified that he remembered Innovative offering to reduce its bid proposal by $5,000.00 if it received the job immediately. Mr. Roumbos stated that he discussed the bid reduction with Complainant. Mr. Roumbos testified that since three of the bids were all very similar, he could see where a bid could be reduced by $5,000.00 without changing the scope of the construction project. Mr. Roumbos’ testimony is found to be credible. Testimony of Ricardo W. Saitas Ricardo W. Saitas (hereinafter “Mr. Saitas”) testified that he is the owner and qualifying party for Mojo Mechanical Heating and Cooling.[10] Mr. Saitas stated that he has been a licensed contractor in the State of Arizona since 1995. Mr. Saitas testified that he prepared a proposal to perform plumbing and HVAC work at Complainant’s rental property for the sum of $6,800.00.[11] Mr. Saitas testified that when he inspected the rental property, he observed a fairly new HVAC unit on the rental property with duct work that was not properly sized. Mr. Saitas stated that the supply duct work was not insulated. Mr. Saitas testified that there were no filter grills. Mr. Saitas testified that the new HVAC unit that he observed on Complainant’s rental property did not comply with applicable workmanship and industry standards. Mr. Saitas testified that he informed Complainant that there was no possible way that he could make the existing HVAC system work. Mr. Saitas stated that it was a “gut and re-do” project. Mr. Saitas testified that he relocated the new HVAC system, removed the existing duct work, and installed new properly sized, insulated duct work to enable the HVAC system to work properly. Mr. Saitas testified that he coordinated his HVAC work with Rincon Roofing’s work on Complainant’s rental property.[12] Mr. Saitas stated that he observed that Innovative had failed to support the parapets on the rental property in accordance with plans and specifications. Mr. Saitas testified that the parapet supports installed by Innovative were inadequate to properly support the parapets. Mr. Saitas stated that he consulted with a structural engineer and corrected the support for the parapets. Mr. Saitas testified that he also holds a general contractor’s license.[13] Mr. Saitas stated that observed a “fairly new” air conditioning unit on the roof of Complainant’s rental property. Mr. Saitas stated that a portion of the existing duct work was new. Mr. Saitas testified that none of the duct work could be used because it was not properly sized and was not insulated. Mr. Saitas testified that he had not examined a full set of the plans. Mr. Saitas stated that he did not know if his bid contained construction work that was not contained in the architect’s plans and specifications. Mr. Saitas testified that Innovative had installed two exhaust fans in one bathroom and no exhaust fan in the second bathroom. Mr. Saitas’ testimony is found to be credible. Testimony of Michael Solot Michael Solot (hereinafter “Mr. Solot”) testified that he is a member of Complainant. Mr. Solot stated that Complainant hired Mr. Roumbos to complete plans for the demolition and remodeling of Complainant’s rental property. Mr. Solot testified that he met with Mr. Williamson at the property and gave him a set of approved plans for the construction project. Mr. Solot stated that Innovative then provided a bid for the construction project. Mr. Solot testified that in December 2011, Complainant decided to reduce the scope of the architect’s plans and asked Innovative to resubmit its bid. Mr. Solot stated that the changes that Complainant wanted to the approved plans were as follows: 1. The bathroom on the East side was to be left with stubs only, no fixtures. 2. The drop ceiling was to be removed but not replaced. 3. The façade of the building was to be left as is. 4. No electrical or drywall work was to be performed. Mr. Solot testified that the demolition work and the removal of the old sign on top of the roof were to be completed in accordance with the approved plans. Mr. Solot stated that Complainant informed Mr. Williamson that all work was to be performed strictly to code. Mr. Solot testified that he received several telephone calls from Innovative. Mr. Solot stated that it was obvious that Innovative wanted the construction project. Mr. Solot testified that Innovative offered to take $5,000.00 off of its second bid or to add an HVAC unit at no charge. Mr. Solot testified that Complainant chose to accept the $5,000.00 credit with the provision that Complainant could add an HVAC unit at another time. Mr. Solot stated that Complainant signed the contract with Innovative on December 22, 2011, and gave Innovative a check in the sum of $8,806.85, representing 44% of the total revised contract price.[14] Mr. Solot testified that Innovative began demolition work and that on January 3, 2012, Complainant made a second payment of $8,806.85 to Innovative. Mr. Solot stated that during the construction project, Innovative suggested changes to the approved plans. Mr. Solot acknowledged that Complainant agreed to the following changes: 1. Leaving the overhang in the back on the west side of the rental property. 2. Leaving the wall dividing rooms 6 and 8. 3. Installation of a completed ADA bathroom on the east side of the rental property. 4. Installation of a non-ADA bathroom on the west side of the property. 5. Installation of a new glass storefront on both the east and west sides of the rental property. Mr. Solot testified that Complainant assumed that there would be no change in the cost of the construction project because of the reduced amount of demolition work that Innovative would be required to perform. Mr. Solot stated that the cost of demolition work was 25% of the construction contract. Mr. Solot testified that Complainant gave Innovative a “very free hand” in the construction project. Mr. Solot testified that Complainant went along with any change suggested by Innovative because of its trust in Mr. Williamson. Mr. Solot stated that Innovative did not even suggest that there would be any extra cost for the changes until Complainant filed the complaint with the Registrar of Contractors. Mr. Solot testified that in mid-January 2012, he told Mr. Williamson to install the HVAC unit for the additional sum of $5,000.00. Mr. Solot stated that he and his brother met with Mr. Williamson at the rental property on February 10, 2012. Mr. Solot testified that the parties discussed the construction project and Mr. Williamson presented Complainant with an invoice in the sum of $9,416.65. Mr. Solot stated that Complainant paid the invoice. Mr. Solot testified that Mr. Williamson assured him that Innovative had completed the roofing work on the rental property during a conversation that occurred in the middle of February 2012. Mr. Solot stated that Mr. Williamson said that roofing work had been completed by a licensed roofing subcontractor and that the roofing work was under warranty. Mr. Solot testified that in late February or early March 2012, Innovative removed the existing storefront from the rental property in preparation for installing the new glass storefront. Mr. Solot stated that the rental property was “boarded up” for two months with no progress in the construction project. Mr. Solot testified that Complainant became increasingly dissatisfied with Innovative’s failure to complete the construction project and finally demanded an explanation. Mr. Solot testified that at first, Mr. Williamson blamed the glass company stating that the new glass storefront had been ordered but not delivered. Mr. Solot stated that Mr. Williamson assured him that all of the construction work, including the bathrooms and the ceilings, had been completed except for the new glass storefront. Mr. Solot testified that he inspected the property and observed that the bathrooms had not been completed and that there was no indication that any work had been performed on the ceiling. Mr. Solot testified that Innovative assured him that the construction work would be completed once the new glass storefront arrived. Mr. Solot stated that he contacted the glass storefront supplier, Geronimo Glass, and was informed that no order had ever been placed for the new glass storefront. Mr. Solot testified that Complainant then contacted Mike Gross (hereinafter “Mr. Gross”) of Tucson Reality. Mr. Solot testified that Complainant, Innovative, and Mr. Gross met at the rental property. Mr. Solot stated that Innovative agreed to complete the construction project by May 18, 2012. Mr. Solot stated that when the construction project was not competed by May 18, 2012, the parties met again on June 19, 2012, and Innovative once again agreed to complete the construction project. Mr. Solot testified that he visited the property again in mid-July 2012, and observed a large area of ceiling damage in the rental property. Mr. Solot stated that he contacted Innovative and that Mr. Williamson assured him that the construction work would be completed. Mr. Solot testified that he personally inspected the roof again on July 15, 2012, and observed that no work had been performed on the roof of the rental property and that the HVAC ductwork was incomplete. Mr. Solot testified that Complainant filed a formal Complaint with the Registrar of Contractors in late July 2012. Mr. Solot stated that in an email dated November 2, 2012, Complainant’s attorney informed Innovative that since Innovative had abandoned the construction project, Complainant was retaining a replacement contractor to complete the construction project.[15] Mr. Solot testified that he was a writer and his brother was a lawyer. Mr. Solot stated that his uncle had extensive experience in real estate. Mr. Solot stated that Complainant “had assumed all along” that Innovative had engineered the new HVAC system to adequately cool both sides of the rental property. Mr. Solot acknowledged that the parties did not have a written contract that stated the scope of work for the installation of the new HVAC system. Mr. Solot acknowledged that Innovative removed an old HVAC unit and installed a new HVAC unit on the roof of Complainant’s rental property. Mr. Solot testified that the December 22, 2011 Proposal in the amount of $26,447.00 was the contract between the parties. .Mr. Solot stated that the other documents were negotiations. Mr. Solot acknowledged that the December 22, 2011 contract did not include all of the construction work specified in the architect’s approved plans and specifications. Mr. Solot strongly denied that Complainant had asked Innovative to perform the construction work without a required construction permit. Mr. Solot testified that the work addressed in Mr. Karic’s August 14, 2012 written report was not “identical’ with the construction work required to be performed in the parties’ December 22, 2011 contract. Mr. Solot agreed that Mr. Karic’s report went beyond the scope of the parties’ written contract. Mr. Solot testified that Innovative had knowingly misrepresented the status of the construction project. Mr. Solot stated that Complainant had repeatedly attempted to get Innovative to complete the construction project so that Complainant could lease the property. Mr. Solot acknowledged that Innovative’s bond company had paid Complainant the sum of $7,500.00 for its claim against Innovative’s contractor’s bond. Mr. Solot testified that Innovative failed to complete the construction project. Mr. Solot stated that Complainant was required to hire other contractors to complete the construction project. Mr. Solot testified that Mr. Saitas installed baseboards in the rental property. Mr. Solot acknowledged that the installation of baseboards was not included in the parties’ construction agreement. Mr. Solot testified that there is now a tenant in the rental property. Mr. Solot stated that Complainant was not asking that any additional work be performed by Innovative. Mr. Solot stated that the local building authority had issued a certificate of occupancy for the rental property. Mr. Solot testified that Complainant would not have agreed to pay an extra $5,000.00 to Innovative if Complainant had known Innovative was going to install the HVAC unit in an unprofessional manner. Mr. Solot stated that the purpose of the construction agreement was to restore the rental property to rentable condition. Mr. Solot testified that Complainant’s attorney offered Innovative access to the rental property to comply with the terms of the Corrective Work Order. Mr. Solot stated that Complainant informed Innovative that it was not denying access to Innovative but that Complainant did want to be informed as to when Innovative was going to perform the corrective work.[16] Testimony of Michael A. Gross Michael A. Gross (hereinafter “Mr. Gross”) testified that he is a broker with Tucson Reality and Trust. Mr. Gross stated that he was familiar Complainant’s rental property. Mr. Gross testified that Tucson Reality and Trust had been the property manager for the property for the last five to seven years. Mr. Gross testified that the rental property was in pitiful shape before Innovative began work on the property. Mr. Gross stated that he recommended that the structure on the property be torn down and rebuilt. Mr. Gross testified that he attended a meeting between Complainant and Innovative that occurred in April 2012. Mr. Gross testified that at the meeting, he observed that the property had been improved. Mr. Gross stated that he felt the property could have been leased out at that time. Mr. Gross testified that there were “minimal things that needed to be done for a tenant to occupy the building.” Mr. Gross testified that on May 4, 2012, he prepared a list of items that the parties agreed required completion.[17] Mr. Gross stated that the list was prepared after he and the Solots had walked through the property. Mr. Gross testified that all of the items on the list had been performed. Mr. Gross stated that the storefront delayed the construction project because the original glass provider failed to provide the storefront in a timely manner. Mr. Gross testified that there was no discussion that Innovative would be required to comply with the approved architectural plans and specifications. Mr. Gross stated that the parties discussed installing a second HVAC unit at the meeting. Mr. Gross testified that he had suggested that Complainant delay putting in a second HVAC unit until a tenant could be found for the rental property. Mr. Gross acknowledged that he did not prepare the May 4, 2012 list of items to be completed. [18] Mr. Gross agreed that Mr. Solot had prepared the May 4, 2012 list of work to be completed by May 18, 2012. Mr. Gross agreed that the May 4, 2012 document had been signed by Mr. Williamson. Mr. Gross stated that the Solots agreed that the May 4, 2012 list was the “deal.” Mr. Gross acknowledged that he did not know the terms of all of the parties’ agreements. Testimony of David John Williamson Mr. Williamson testified that he started his own electrical company in 1979. Mr. Williamson stated that he been a general contractor since the 1990s. Mr. Williamson testified that he is the general superintendent for Innovative. Mr. Williamson testified that he had performed prior construction work for Tucson Reality and Trust. Mr. Williamson stated that he met with the architect at the rental property. Mr. Williamson testified that he prepared a preliminary electrical design for the construction project so that the architect could complete his plans for the rental property. Mr. Williamson testified that the architect gave him a set of construction documents at the meeting. Mr. Williamson denied that the architect gave him a set of the City-approved plans for the construction project. Mr. Williamson stated that he had not seen the City-approved plans for the construction project before the hearing. Mr. Williamson acknowledged that there was a set of plans on the jobsite at the construction project. Mr. Williamson stated that they were not “permitted” plans. Mr. Williamson testified that his original proposal was for in the sum of $39,030.00.[19] Mr. Williamson stated that Innovative’s original proposal was based upon the plans provided by the architect. Mr. Williamson testified that five months later, Innovative submitted a second revised proposal in the sum of $29,280.00.[20] Mr. Williamson stated that Innovative was able to reduce the price because Complainant eliminated items from the first proposal. Mr. Williamson testified that Complainant “really did not want to spend any money” for the construction project. Mr. Williamson stated that he did not believe that Complainant knew what kind of work it wanted to be performed. Mr. Williamson testified that Complainant’s rental property looked horrible when the construction project started. Mr. Williamson stated that the whole front of the building was coming off. Mr. Williamson testified that there was a leak in roof and the back part of the building was a “makeshift” detail shop. Mr. Williamson testified that he provided Complainant with the December 22, 2011 Proposal for the sum of $26,447.00.[21] Mr. Williamson stated that the proposal included a $200.00 fee for a demolition permit. Mr. Williamson testified that there was no need for any other construction permits for the construction project. Mr. Williamson testified that the $5,000.00 credit was issued by Innovative to motivate Complainant to sign a contract. Mr. Williamson stated that there was no discussion of an air conditioning unit at that time. Mr. Williamson testified that Innovative performed extensive demolition work at the construction project. Mr. Williamson stated that Innovative removed the large sign and re-flashed and re-coated the roof. Mr. Williamson testified that his painter then applied three coats of paint to the roof. Mr. Williamson testified that he offered to show the completed roof work to the Solots but that the Solots were not willing to go onto the roof. Mr. Williamson stated that entire roof was repaired and re-coated. Mr. Williamson stated that Complainant reduced the scope of the framing and drywall work on the interior of the residence. Mr. Williamson testified that Innovative performed construction work beyond the scope of the construction project. Mr. Williamson acknowledged that the construction of the parapet wall was nothing like the original design.

Mr. Williamson testified that the architectural drawings were never adhered to by the parties. Mr. Williamson stated that the parties agreed to deviate from the architect’s drawings as part of their contract based on Innovative’s December 22, 2011 proposal that became the parties’ December 22, 2011 contract. Mr. Williamson testified that Innovative completely remodeled both bathrooms, including installation of new fixtures. Mr. Williamson testified that the parties’ written agreement was for Innovative to “cap off” the existing plumbing fixtures in both bathrooms. Mr. Williamson testified that the ceiling grid should never have been in the December 22, 2011 Proposal because Innovative did not agree to install a grid ceiling. Mr. Williamson stated that Complainant agreed to the installation of track lighting rather than the type of lighting called for in the architect’s plans for the construction project. Mr. Williamson testified that Innovative gave Complainant what it wanted. Mr. Williamson testified that he was familiar with the City of Tucson’s permit requirements. Mr. Williamson stated that none of the work set forth in the December 22, 2011 Proposal required a construction permit. Mr. Williamson testified that “later on” a permit would have been required for the installation of the new air conditioning unit. Mr. Williamson testified that once construction work started, Complaint wanted changes in the construction project. Mr. Williamson stated that he gave Complainant his “advice” because the Solots could not read plans. Mr. Williamson testified that he did not provide Complainant with numbers for the changes that he suggested. Mr. Williamson stated that the changes cost Innovative time and money. Mr. Williamson testified that when Complainant threatened to file a complaint against Innovative with the Registrar of Contractors, he demanded that Complainant pay for the changes that were made in the construction project.[22] Mr. Williamson stated that he was trying to convince Complainant that the construction project had cost Innovative more than the value of the construction contract. Mr. Williamson testified that there was a constant problem with graffiti on the exterior of the rental property. Mr. Williamson stated that Innovative’s painters painted over the graffiti a dozen times. Mr. Williamson testified that Innovative also painted the exterior of the building next door to match the exterior of the rental property. Mr. Williamson stated that the painting of graffiti and the building next door was not part of the scope of the parties’ construction agreement. Mr. Williamson testified that there was no provision for electrical work in the parties’ construction agreement. Mr. Williamson stated that Innovative ended up installing new electrical fixtures in the storage area and reinstalled the interior lighting. Mr. Williamson testified that Innovative performed quite a bit of electrical work at the construction project. Mr. Williamson stated that Innovative had not been paid for the electrical work that it performed at the rental property. Mr. Williamson testified that the December 22, 2011 Proposal was for a simple air conditioning “change-out.” Mr. Williamson denied that Innovative agreed to do any HVAC work on the rental building. Mr. Williamson stated that he provided Complainant with a $5,000.00 bid for the change-out work. Mr. Williamson testified that if Innovative had agreed to replace the existing duct work on the rental property, it would have been a $12,000.00 job rather than a $5,000.00 job. Mr. Williamson testified that Innovative reluctantly agreed to perform some duct work on the rental property in an effort to keep Complainant happy. Mr. Williamson stated that the only agreement that Innovative had with Complainant was part of a compromise to resolve Innovative’s failure to complete the construction project with Complainant. Mr. Williamson testified that he did not remember all of the specifics of the May 4, 2012 meeting between the parties. Mr. Williamson stated that Innovative performed all of the construction work set forth on the May 4, 2012 list. Mr. Williamson testified that the Corrective Work Order was extremely one- sided. Mr. Williamson stated that the Corrective Work Order mimicked the Karic report. Mr. Williamson testified that the Karic report was based on the architect’s plans. Mr. Williamson testified that the parties’ December 22, 2011 construction agreement significantly reduced the scope of construction work to be performed on Complainant’s rental property. Mr. Williamson stated that it would have cost Innovative an additional $30,000.00 to comply with the terms of the Corrective Work Order. Mr. Williamson testified that the terms of the Corrective Work Order went far beyond the scope of the parties’ December 22, 2011 construction agreement. Mr. Williamson testified that after the Corrective Work Order was issued, Innovative performed some corrective work on the rental property. Mr. Williamson stated that Innovative repaired an exterior crack on the rental property and installed “unistrut” bracing for the parapet. Mr. Williamson testified that he did not feel that the bracing specified in the architect’s drawings was required. Mr. Williamson stated that Innovative had lowered the height of the parapet wall so that no bracing should have been required. Mr. Williamson testified that Innovative also installed trim above a window on the inside of the rental property. Mr. Williamson testified that Innovative did not agree to perform construction on the rental property in accordance with the architect’s plans. Mr. Williamson stated that the ceiling had to be left alone because the new store front had already been installed. Mr. Williamson testified that Innovative did not comply with the Corrective Work Order because it included work beyond the scope of the parties’ construction agreement. Mr. Williamson testified that the parties agreed to deviate from the architect’s plans. Mr. Williamson stated that the original construction documents prepared by Complainant’s architect were never part of the parties’ construction agreement. Mr. Williamson denied that there was unacceptable water ponding on the roof. Mr. Williamson acknowledged that there was some ponding that he estimated was less than 1/16th of an inch in depth. Mr. Williamson testified that the amount of water ponding on the roof of the rental property was within applicable workmanship and industry standards. Mr. Williamson acknowledged that the parties repeatedly discussed the installation of the new storefront for the rental property. Mr. Williamson testified that he did not remember blaming the delay on the material supplier for the storefront. Mr. Williamson stated that Innovative did place an order for a new storefront with the manufacturer. Mr. Williamson acknowledged that Innovative’s July 28, 2011 proposal for $39,030.00 was based on the plans provided by Complainant’s architect. Mr. Williamson testified that the construction agreement between Complainant and Innovative was a “design-build agreement” that had nothing to do with the architect’s plans. Testimony of Alan Solot, Esq Alan Solot, Esq., testified that Complainant was able to collect $7,500.00 from Innovative’s contractor’s bond in January 2013. Administrative notice is taken of Innovative’s prior license record as reflected on the Registrar of Contractors’ public website on August 14, 2013. Such prior license record reflects that License No. KB-1.273809-D of Innovative was revoked on June 19, 2013. License No. KB-1.273809-D of Innovative was on disciplinary probation from September 18, 2013, through September 17, 2014. License No. KB-1.273809-D of Innovative was suspended for lack of bond on May 9, 2013. License No. KB-1.273809-D of Innovative had been previously suspended for lack of bond from August 13, 2012, through September 17, 2012. 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. Innovative represented that it had completed construction work that had not been completed. Innovative blamed a delay in the construction project on the failure to a material supplier to deliver a new storefront in a timely manner, when no storefront had been ordered. The parties entered into an agreement wherein Innovative agreed to complete the construction project by May 18, 2012. Innovative failed to comply with the terms of the parties’ agreement. Complainant was required to retain replacement contractors to complete the remodeling project on Complainant’s rental property. This Tribunal concludes that Innovative violated the charged provision of A.R.S. § 32-1154(A)(1). 4. Innovative disregarded approved plans and specifications for the construction project and performed its construction work without a required construction permit. This Tribunal concludes that Innovative violated the charged provision of A.R.S. § 32-1154(A)(2). 5. Innovative installed un-insulated duct work on Complainant’s rental property, installed the new storefront in such a manner as to preclude the installation of a drop ceiling, failed to correct the problems with the roof on Complainant’s rental property, installed the new HVAC unit in such a manner that it required relocation, performed construction work without a required construction permit, and disregarded City-approved plans and specifications. This Tribunal concludes that Innovative violated the charged provision of A.R.S. § 32-1154(A)(3), namely, A.A.C. R4-9-108. 6. Innovative failed to list its Registrar of Contractors’ contractor’s license on a second page of a communication with the Registrar of Contractors on July 26, 2012. Innovative’s contractor’s license number may have been on the first page of the document. This Tribunal concludes that Complainant failed to meet its burden of proving by a preponderance of the evidence that Innovative violated the charged provision of A.R.S. § 32-1154(A)(13), namely, A.R.S. § 32-1124(B). 7. License No. KB-1.273809-D of Innovative was suspended for Lack of Bond on August 13, 2012 through September 17, 2012. Innovative performed construction work at Complainant’s rental property while its contractor’s license was under suspension for lack of bond. This Tribunal concludes that Innovative violated the charged provision of A.R.S. § 32- 1154(A)(18). 8. Innovative declined to comply with the terms of the Corrective Work Order based on its assertion that portions of the Corrective Work Order went beyond the terms of the parties’ construction agreement. Innovative failed to perform corrective action on the items of the Corrective Work Order that were undisputedly within the parties’ construction agreement. This Tribunal concludes that Innovative violated the charged provision of A.R.S. § 32-1154(A)(23). RECOMMENDed order In view of the foregoing, it is recommended that License No. KB- 1.273809-D of Innovative shall be revoked. It is further recommended, in addition to the above-provided penalties, if any, that Innovative pay the sum of $500.00 to the Registrar of Contractors by way of a civil penalty pursuant to A.R.S. § 32-1154(D). The failure by Innovative to pay the entire amount of the aforesaid civil penalty on or before 30 days following the effective date of the Order entered in this matter, shall result in the automatic revocation of Innovative’s contractor’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Innovative, 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 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 23, 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)(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. [3] A.R.S. § 32-1154(A)(3) includes among the grounds for disciplinary action against a contractor’s license, violation of any rule adopted by the registrar. [4] A.A.C. R4-9-108 provides, in pertinent part, as follows:

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.

[5] 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.

[6] A.R.S. § 32-1154(A)(18) includes among the grounds for disciplinary action against a contractor’s license, contracting or offering to contract or submitting a bid while the license is under suspension or while the license is on inactive status. [7] A.R.S. § 32-1154(A)(23) includes among the grounds for disciplinary action against a contractor’s license, 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. [8] Mr. Karic is listed as the qualifying party for License No. KB-1.173674- D of Triumph Builders Southwest LLC. Mr. Karic is also listed as the qualifying party for License No. KB-1.248529-D of United Builders LLC dba: A K American Construction. [9] See Exhibit No. C-1 (8/14/12 Report). [10] Administrative notice is taken of a search of the Registrar of Contractors’ public website on August 19, 2013. Such search reflected that License No. K-38.269527-D of Mojo Mechanical Heating & Cooling was current and in good standing. [11] See Exhibit C-5 (11/5/12 proposal). [12] Administrative notice is taken of a search of the Registrar of Contractors’ public website on August 19, 2013. Such search reflected that License No. L-42.074262-C of Rincon Roofing Inc was current and in good standing. [13] Administrative notice is taken of a search of the Registrar of Contractors’ public website on August 19, 2013. Such search reflected that License No. B.279559-R of Mojo Construction LLC was current and in good standing. [14] See Exhibit No. C-8 (12/22/11 Proposal for $26,447.00). [15] See Exhibit C-12 (11/2/12 Email). [16] See Exhibit Nos. C-13 (Email from Complainant’s attorney to Innovative’s attorney). [17] See Exhibit R-4 (List of Work to be completed by May 4, 2012). [18] See Exhibit C-10 (List of Work to be completed by May 4, 2012). [19] See Exhibit No. C-8 (7/28/11 Proposal). [20] See Exhibit No.C-8 (12/12/11 Proposal). [21] See Exhibit No. C-8 (12/22/11 Proposal). [22] See Exhibit No. R -5 (Construction Change Order).

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