ALJDEC decisions subject to certification as final

2012A-5768-ROC · Registrar of Contractors · 2013-08-22

`IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 2, 2013 APPEARANCES: Complainants Natalie Hayward and Mark Oldroyd appeared on their own behalf. Respondent Dreamscapes Lighting and Landscape LLC appeared through Jonathan Charnoc, its Qualifying Party. ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer _____________________________________________________________________ FINDINGS OF FACT The Arizona Registrar of Contractors (“the Registrar”) issued License No. B- 5.262271-R and License No. K-21.218384-D to Respondent Dreamscapes Lighting and Landscape LLC (“Respondent”). On November 29, 2012, the Registrar received a Complaint against Respondent from Natialie Hayward and Mark Oldroyd (“Complainants”) regarding the pool, spa, doors, patio roof, and pavers included in an extensive refurbish project of their home at 39615 North Spur Cross Road, Cave Creek, Arizona. The Complaint included 13 numbered issues. On or about November 29, 2012, Respondent filed for Chapter 7 bankruptcy protection and received protection against complaints through the automatic stay. On or about January 25, 2013, Complainants received an Order Re: Motion for Relief From Automatic Stay in which it was ordered that the automatic stay is lifted and thus modified to authorize Natalie Hayward and Mark Oldroyd: (1) to continue to the prosecution of a complaint against Debtor with the Arizona Registrar of Contractors; (2) to continue prosecution of an administrative claim against Debtor with the Arizona Registrar of Contractors Recovery Fund for any damages incurred by Natalie Hayward and Mark Oldroyd; and (3) to potentially commence a civil suit against the Debtor and any surety of the Debtor, in Maricopa County Superior Court, for the sole purpose of obtaining a judgment to be used as a basis for recovery from any surety of the Debtor and/or the Arizona Registrar of Contractor Recovery Fund.

After the Registrar assigned the Complaint to its inspector, Phil Coscia, for investigation, he performed a jobsite inspection. In the Corrective Work Order issued on February 26, 2013, Inspector Coscia indicated that one item in the complaint had been addressed and required no corrective action by Respondent. As to the remaining items, Inspector Coscia stated as follows: Contractor should correct the following items of complaint by the appropriate means: 2) No “back plug” on fountain feature and extremely shoody “Pebble Tec” interior workmanship 3) Fountain feature remodeled by contractor is leaking and not holding water 4) Stucco work not complete 5) Crack appeared above lintel to newly installed double door entrance way to patio area within days of install. 6) Double doors installed for above mentioned new entrance way do not shut flush. 7) Damage to front exterior of property caused by contractor driving bobcat into front of building. 8) Pavers on patio installed by contractor only partially sealed. 9) Did not begin work to patio roof. Demolition works complete and now have exposed areas at one side of the house requiring urgent repair. 10) Failure to complete building permit which was verbally agreed would be completed by general contractors’ sub-contractor; Queries remain outstanding from Town of Cave Creek. 11) Did not install pool light. Pool must now be drained at additional cost to complete this work. 12) Did not begin work to single door entrance way which was to lead to front patio area (where new patio roof was to be installed).

Complainants requested a hearing. The Registrar issued a Citation and Complaint against Respondent, charging possible violations of A.R.S. § 32- 1154(A)(1); A.R.S. § 32-1154(A)(2); A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108; A.R.S. § 32-1154(A)(17); and A.R.S. § 32-1154(A)(23). Respondent filed a timely written answer to the Citation and Complaint, denying any statutory violations. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. A hearing was held on August 2, 2013. Inspector Coscia testified about the Registrar’s standards. Complainants submitted 17 exhibits and Complainant Natalie Hayward testified. Respondent did not submitted any exhibits and presented the testimony of Jonathan Charnock, its Qualifying Party. Hearing Evidence On September 26, 2012, Complainants entered into a contract with Respondent for an extensive refurbish including the pool, spa, patio roof, pavers, and doors for a total contract price of $69,547.68. Respondent refinished the pool and spa, but failed to install the pool light called for in the contract. Also, the finish in the pool, spa, and fountain did not meet the workmanship standards established by the Registrar. While the contract provided for Respondent to “Redo fountain” for a cost of $650.00, Respondent did not complete any finishing work around the fountain feature including stucco, paint, tile, plumbing, or grouting. Rather, Respondent redid only the interior finish of the fountain. The pavers on the patio were not properly installed or sealed by Respondent. During the course of the project, Respondent tore down the existing patio roof in preparation for the new installation. Respondent also submitted plans to the Town of Cave Creek for the new patio roof. On November 5, 2012, the Town of Cave Creek rejected the plans submitted as being beyond the scope of Respondent’s license in addition to other technical issues. Respondent argued it regularly installed patio roofs as part of its landscaping license and only discovered such installations were considered beyond the scope of its license when the Town of Cave Creek rejected the plans and Respondent contacted the Registrar for clarification. During the clean up of construction debris in the front of the home, Respondent damaged the front wall. Respondent contracted to perform work on three doors into the home – the installation of double doors in the front entry and back patio area and the installation of a single door from the patio area to the master bedroom. Respondent installed the double doors in the back patio entry, which Respondent acknowledged were not installed properly. The doors were not flush when they closed and a crack above the lintel appeared days after installation. Respondent did not perform any work on the front entry door or the door to the master bedroom. Respondent acknowledged that the three doors in the contract were beyond the scope of its licenses, but alleged the “handyman exemption” found in A.R.S. § 32-1121 meant it did not have to be licensed for that portion of the contract because the doors were less than $1,000.00 each.[1] Inspector Coscia testified the handyman exemption did not apply to licensees and only to those individuals and entities that were not licensed. Inspector Coscia stated that licensees were required to practice within the scope of their particular license regardless of the amount of that portion of work that was beyond the scope of their license. Complainants paid $64,697.91 to Respondent for the work performed on the project, including a change order for $2,106.00. When Respondent filed for Chapter 7 bankruptcy protection, Respondent ceased operations as the bankruptcy trustee took over Respondent’s business and Respondent was prevented from performing any additional work on the project. Administrative notice is taken of Respondents’ License records as reflected on the Registrar’s public website as of August 22, 2013. Such prior License record reflects that Respondent’s License No. K-21.218384 was suspended for lack of bond on February 21, 2013, and was voluntarily cancelled on March 15, 2013; Respondent’s License No. B-5.262271 was suspended for lack of bond on January 13, 2013, and was voluntarily cancelled on March 15, 2013. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32- 1101 et seq. 2. Pursuant to A.R.S. § 32-1154(C), the voluntary surrender of a license does not deprive the Registrar or this tribunal of jurisdiction and does not render the Registrar powerless to discipline the license further. 3. Complainant bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence. See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and A.A.C. R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). “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). 4. Once Respondent filed for Chapter 7 bankruptcy protection, it could not perform any further work on the project. Such a situation constitutes a legal excuse to performance. Therefore, Complainants failed to establish that Respondent abandoned the contract or refused to perform after it submitted a bid on work without legal excuse for the abandonment or refusal in violation of A.R.S. § 32-1154(A)(1).[2] 5. The plans agreed to between Respondent and Complainants indicated Respondent would install a pool light during the refinishing of the pool and Respondent failed to do so. Therefore, Complainants established that Respondent departed from or disregarded the plans in violation of A.R.S. § 32-1154(A)(2).[3] 6. The corrective work order identified 12 items that did not meet the Registrar’s workmanship standards and Respondent needed to address. Respondent acknowledged there were workmanship issues with at least some of the items identified. Therefore, Complainants established that Respondent’s work with respect to those items identified in the corrective work order violated industry standards and/or was not professional and workmanlike in violation of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108.[4] 7. Complainants established that Respondent contracted beyond the scope of its licenses when it contracted to build a patio roof and install three doors in violation of A.R.S. § 32-1154(A)(17).[5] 8. As a result of Respondent filing for Chapter 7 bankruptcy protection, Respondent was unable to take any corrective action following the corrective work order. While Complainants were granted relief from the automatic stay, the language of that order allows Complainants to prosecute a complaint against Respondent as the basis of a claim from the Arizona Registrar of Contractor Recovery Fund. It did not authorize Respondent to perform the corrective work. Complainants did not establish that Respondent failed to take appropriate corrective action to comply within a reasonable period of time after receiving a written directive from the Registrar without valid justification in violation of A.R.S. § 32-1154(A)(23).[6] RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar shall revoke Respondent Dreamscapes Lighting and Landscape LLC’s License No. B-5.262271-R and License No. K-21.218384-D.

In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be 40 days from the date of that certification. Done this day, August 21, 2013.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors

----------------------- [1] It is noted the two double doors were listed in the contract for a total cost of $3,250.00 and the single door was listed in the contract for $850.00. Therefore, even if Respondent’s argument was valid, at least one of the double doors was more than $1,000.00. [2] A.R.S. § 32-1154(A)(1) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]bandonment 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 suspension, revocation, or other disciplinary action against a contractor’s license, [d]eparture 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. § 32-1154(A)(3) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[v]iolation of any rule adopted by the registrar.” A.A.C. R4-9-108 requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.” [5] A.R.S. § 32-1154(A)(17) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[k]nowingly contracting beyond the scope of the license or licenses of the licensee.” [6] A.R.S. § 32-1154(A)(23) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure 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.”

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