ALJDEC decisions subject to certification as final

2012A-5958-ROC · Registrar of Contractors · 2013-11-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 5, 2013

APPEARANCES: Complainants appeared on their own behalf; Respondent was represented by attorney Charles Hultstrand, accompanied by President and Qualifying Party William “Bill” DePaul, Jr.

WITNESSES: Ted Gerold, ROC Inspector Joyce Strickling Robert Strickling Bill DePaul

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainants bring this action against Respondent based on kitchen remodeling work done at Complainants’ house. The Citation and Complaint issued by the Registrar of Contractors (“Registrar” or “ROC”) alleges violations of failure to meet workmanship standards; failure to comply with a Corrective Work Order; aiding and abetting unlicensed contracting, and other violations. Respondent denies the alleged violations. This tribunal entered the complaint file received from the ROC into the record, along with Exhibits 1 through 13 submitted by Respondent. Testimony was presented from the witnesses listed above. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding violations and recommending discipline. FINDINGS OF FACT 1. Respondent is the holder of License No. K-8.180172-D, a dual specialty floor covering contractor’s license issued by the ROC. It authorizes Respondent to perform residential and commercial installation of floor covering materials and accessories. It does not allow Respondent to perform or hire subcontractors to perform cabinetry or countertop work. William A. DePaul Jr. is the Qualifying Party on the license. 2. Respondent is a small business managed by its President Bill DePaul. In late 2011, Ed Miranda (“Miranda”) was employed by Respondent as a Sales Rep/Project Manager. He had been employed with Respondent for several years and was the only Sales Rep/Project Manager for the company. In November 2011, Miranda met with Complainants for a potential job. Miranda, on behalf of Respondent entered into an agreement with Complainants to remodel their kitchen and several other small areas. An estimate was created (Exhibit 6) that shows that Respondent offered to perform carpet sale and installation, tile sale and installation, kitchen cabinet sale and installation, and granite kitchen countertops sale and installation.[1] According to the testimony of Bill DePaul (“DePaul”), he received the estimate from Miranda and created a contract form to be signed by Complainants (Exhibit 5).[2] That contract was never signed by Complainants or Respondent. DePaul testified that he ordered Miranda to get the contract signed numerous times but that it was never done. 3. Sometime during the project, DePaul went to the jobsite and briefly observed it from the street. He saw evidence of work being done, but nobody was at the site while he observed. He did not do any further supervision of the project. 4. The agreement with Complainants had a total price of almost $29,000. By April 2012, Respondent had been paid $21,500 of the price. About that time, DePaul and Miranda had a “blow up” and “parted ways.”[3] DePaul never saw Miranda again. DePaul went to Complainants jobsite in late May 2012 to see if there were any problems with it. Complainants were surprised to see DePaul, who they had not known of prior to that visit and expressed some concerns with several aspects of the work.[4] They had been led to believe that Miranda was the company they were dealing with. DePaul learned that Complainants had paid Miranda directly about $14,650 for the last part of the work. There is also evidence of additional work that Miranda performed and billed Complainants for.[5] Complainants considered the matter paid in full. 5. In addition to the work that Respondent performed, Respondent subcontracted the cabinet work to “AZ Shutters & Custom Cabinets” represented by James LeRoy Gibbs (“Gibbs”). The record contains an invoice with a logo for that company and an ROC license number listed on it.[6] The license number on the invoice does not belong to Gibbs or any company he is associated with. In fact, neither Gibbs nor “AZ Shutters & Custom Cabinets” has ever been licensed by the ROC. DePaul testified that he was unaware of that at the time and that he had trusted Gibbs. Gibbs performed the cabinet work at Complainants’ house for Respondent’s project. 6. On January 3, 2013, ROC Inspector Ted Gerold inspected the jobsite and, on January 4, 2013, issued a Corrective Work Order (“CWO”) that states the following: This contractor cannot do any of the work in the following corrective work order except for item #4 – Caulking of the baseboards - so should hire a properly licensed contractor to complete the rest of the items listed below in this corrective work order.

1) There are cabinet drawers, doors, and door knobs throughout the kitchen that are misaligned and don’t open and close properly. Contractor to correct as needed.

2) The stile make-up of the cabinetry is inconsistent. Some base cabinets have a center stile some don’t and no upper cabinets have a stile at all. Since no drawings and or specs were provided this contractor is to ensure that all cabinets either have a stile or don’t.

3) The cabinetry around the refrigerator should be brought out to the back of the refrigerator’s doors completely concealing the sides of the refrigerator. This includes the side panels and upper cabinetry. Contractor to correct.

4) All baseboards that were a part of the flooring project need to be sealed at the bottom. Contractor to address.

5) The kitchen island top and the top to the right of the ovens have excessive cracks in the granite. Contractor to replace both areas and closely match to the remaining tops. Also, per jobsite inspection, contractor to remove stains in the top that has to be replaced so the stains are a moot point.

6) Hall bath toilet uneven and shims exposed. Contractor to properly finish toilet installation.

7) The master bedroom and family room shutter sliding tracks need to be installed. Contractor to complete.

8) The only shutters that were demonstrated at the jobsite inspection to NOT close properly were in the front room and master bedroom to the left of the bed. Contractor to correct.

Respondent corrected #4, #6, and #8, and performed work on #1, #7, and #8.[7] Respondent took the position that no work was needed on #2, #3, and #5 because there are no standards that require the work ordered. Complainants requested a hearing to address CWO numbers 1, 2, 3, 5, and 7. Kitchen Issues (#1,# 2,# 3, and #5) 7. Inspector Gerold testified at the hearing that CWO #1 had not been corrected at the time of the hearing. He inspected it on October 9, 2013, and found that the margins between the doors were not consistent. He measured margin-width ranges from a quarter-inch to a full inch. He testified that the standard in the industry is, based on his many years in Arizona as a superintendent for home builders and his experience prior to that as a carpenter, to determine a margin-width and then make all margin- widths consistently meet that measurement. The margin-width could be one- half inch or one quarter-inch, as long as all the margin-widths in the kitchen were the same or very close. That consistency was not present for Complainants’ cabinets. He also found that cabinet doors and knobs were misaligned. He found these conditions to continue to exist at his pre- hearing inspection. 8. In response, DePaul testified that, with one small exception regarding a hinge adjustment, the cabinets were fine. He stated that there is no standard for margin width. However, Respondent does not have a carpentry or cabinetry license, and DePaul is not qualified to testify about industry standards with regard to cabinets. He testified that he has “20 years” experience “designing kitchens and cabinets,” but that statement is not supported by any independent evidence or documentation. A bald statement like that without other support is given no weight and DePaul’s opinions about matters outside the scope of Respondent’s license will not be considered by the Administrative Law Judge. 9. Respondent also submitted affidavits from others in support of its position that there are no standards for margin width and other opinions given by Inspector Gerold. However, those affidavits are not given much weight by the Administrative Law Judge for several reasons, stated below in the next finding. To set the context for that finding, it is noted that Inspector Gerold testified that several of his conclusions in the CWO are based on his experience building homes in Arizona. He acknowledged that not all workmanship standards are written; some are based on experience by those working in the field. This was the basis for Inspector Gerold’s orders on CWO items #1, #2, and #3 and the Administrative Law Judge finds that this basis is a legitimate basis for making a determination about workmanship. However, it appears that Respondent did not understand that point at the hearing because Respondent’s counsel repeatedly questioned Inspector Gerold about written standards addressing the issues in CWO #1, #2, and #3. Those questions by Respondent were off point and are given no weight. 10. There are two affidavits submitted by Respondent in Exhibit 3 concerning the cabinet issues (CWO #1, #2, and #3), one from a licensed carpenter and one from a cabinet supplier. They both state that they find no issues with the cabinets as installed. The hearsay statements from these two professionals cannot be given much weight by the Administrative Law Judge because it appears that they address whether there are written standards and do not appear to address standards based on practice and experience. These two affiants were not present to be questioned about the bases for their opinions, as Inspector Gerold was. In addition, the bases for their observations of the cabinets are not clear. Did they observe the cabinets on site or by photograph? When did they do their inspections and under what circumstances? These and other questions are unanswered, which diminishes any weight that can be given to their opinions. The Administrative Law Judge finds that the affidavits in Exhibit 3 do not carry much weight and do not outweigh the testimony of Inspector Gerold. 11. The evidence shows that the cabinets as described in CWO #1 do not meet workmanship standards due to misaligned doors and knobs and due to inconsistent margins. 12. CWO #2 concerns the stiles that are present on some, but not all, of the cabinets. Inspector Gerold testified that the problem is, again, consistency. He stated that the industry standard is to either have all cabinets with stiles or all without. This opinion was also based on his experience in Arizona. 13. As noted, Respondent has not presented evidence substantial enough to rebut Inspector Gerold’s testimony. Therefore, the evidence shows that CWO #2 remains uncorrected. 14. CWO #3 has to do with the cabinetry built around the refrigerator. The cabinetry is a standard depth and the refrigerator is not standard. Thus, it “sticks out” from the cabinetry. The CWO ordered Respondent to reconstruct the cabinetry so that it comes out farther. Inspector Gerold testified that, without plans or drawings, if the refrigerator was already present then it should have been measured by Respondent and the cabinetry surrounding it built to match it. If not, then a standard depth is acceptable. 15. Again, Respondent has no evidence substantial enough to rebut the Inspector’s testimony. But in this instance, the Administrative Law Judge finds the deviation from industry standards (6 inches) to be minor compared to the ordered correction. A photograph of the kitchen that is in the record confirms that the deviation is minor and not an aesthetic eyesore. The destruction of the cabinetry to rebuild it is more harm than the infraction calls for. 16. The Administrative Law Judge finds that CWO #3 does not meet industry standards, but declines to require correction because of the minor nature of the deviation compared to the destruction necessary to correct it. 17. CWO #5 orders Respondent to replace specified granite countertops due to excessive cracking. Inspector Gerold described the condition of the granite at hearing and stated that the problem with it in those areas was caused during fabrication of the stone.[8] The affidavit submitted by Respondent in Exhibit 3 in response to the Inspector’s testimony suffers from some the same problems as noted above, but does address the fabrication of the slab. It also appears that the affiant, Patrick Provencio (“Provencio”), inspected Complainants’ countertops at their home after they were installed. Provencio is a Manager at the material supplier that provided the stone for Complainants’ countertops. As such, he is biased and that factor is taken into account by the Administrative Law Judge. His affidavit states that the cracks in the countertops are “crack and flaw repairs” that are a part of natural stone products. Inspector Gerold acknowledged this at hearing but stated that these cracks were excessive and unacceptable. 18. Weighing the evidence, the Administrative Law Judge finds that Inspector Gerold’s experience and unbiased opinion (he has no stake in the outcome) is given more weight than Provencio’s affidavit.[9] Thus, the evidence shows that CWO #5 must be corrected. Shutter Issue (#7) 19. The final workmanship issue at hearing concerns the installation of sliding tracks for shutter doors in two locations. Respondent conceded that one of the tracks is not secure to the underlying floor and must be corrected. The other sliding track functions properly, but Inspector Gerold found that it is off-center by a small degree. Exhibit 1 is a photograph that shows the track. DePaul testified that the deviation from center was de minimis, and the Administrative Law Judge agrees. Although the track is off-center slightly, it is a deviation that is de minimis and is not a violation. Therefore, only one of the tracks (the first mentioned above) must be corrected. 20. The evidence shows that CWO #1, #2, #5, and part of #7 do not meet workmanship standards and must be corrected. Respondent did not comply with the CWO. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[10] Further, the standard of proof at hearing is by preponderance of the evidence.[11] Therefore, Complainants bear the burden of showing, by a preponderance of the evidence, that Respondent has violated the statutes cited in the Citation and Complaint.[12] Complainants have met that burden with regard to some of the allegations. 2. The Citation and Complaint alleges violations of A.R.S. § 32- 1154(A)(3) by way of A.A.C. R4-9-108 (prohibiting poor workmanship), A.R.S. § 32-1154(A)(10) (prohibiting aiding or abetting unlicensed contracting), A.R.S. § 32-1154(A)(13) (prohibiting failure to comply with ROC statutes) regarding display of license number on documentation and minimum elements of contracts, and A.R.S. § 32-1154(A)(23) (requiring compliance with a CWO). These will be addressed in turn. 3. As found above, the evidence shows that Respondent performed poor workmanship with regard to CWO #1, #2, #3, #5, and #7. This is a violation of A.R.S. § 32-1154(A)(3) by way of A.A.C. R4-9-108. 4. With regard to aiding or abetting unlicensed contracting, the evidence shows that Respondent failed to check the status of Gibbs’ licensure with a reliable source, such as the ROC website, before subcontracting with him.[13] Respondent should know better. Respondent aided and abetted Gibbs’ unlicensed contracting. With regard to Miranda, because he was an employee of Respondent and did not need a separate license, Respondent did not commit a violation. 5. Respondent clearly violated A.R.S. § 32-1154(A)(13) and did not contest that allegation. He provided a copy of his new contract in Exhibit and it meets requirements. Because of this, no disciplinary action is recommended with regard to this violation. 6. Finally, A.R.S. § 32-1154 (A)(23) requires licensed contractors to comply with CWOs unless they have “valid justification” not to do so. Respondent performed some corrective work, but did not complete all work on the CWO. In addition, Respondent did not have justification for failing to perform all parts of the CWO that were left uncorrected. This shows a violation. 7. Administrative notice is taken of Respondent’s prior license record as reflected on the ROC’s public website on November 27, 2013. That prior record shows that Respondent has held the license since 2002 and Respondent was required to post a disciplinary bond due to case number 07- 1881.[14] This is not a good record. 8. The appropriate sanction in this matter is to suspend Respondent’s license for 30 days and allow Complainants access to the Residential Contractors’ Recovery Fund for compensation for the damages caused by Respondent’s violations, so that properly licensed and knowledgeable contractors can repair the work. In addition, a probationary period is warranted as well as a civil penalty for failure to comply with the CWO. RECOMMENDED ORDER Based on the foregoing, it is hereby recommended that License No. K- 8.180172-D, held by Respondent A A A Plus Flooring Inc., shall be suspended for a period of 30 days beginning the effective date of the Order entered in Case No. 2012-5958, followed immediately by a period of disciplinary probation for a period of one year. IT IS FURTHER RECOMMENDED that, along with the sanction provided above, A A A Plus Flooring Inc. pay a civil penalty of $250.00 to the Registrar of Contractors pursuant to A.R.S. §32-1154(D). Failure to pay the entire amount of the civil penalty on or before 30 days following the effective date of the Registrar’s Order entered in this matter shall result in the automatic revocation of Respondent’s license, effective on the deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. § 32- 1101(A)(5), unless payment of any outstanding prior civil penalty is made.

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, November 27, 2013.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Respondent argued at hearing that the agreement with Complainants did not provide for installation of the countertops by Respondent, but this is not substantiated by the documentation. Exhibit 6 is silent with regard to installation of the countertops but provides for installation of kitchen cabinets. There is no written exclusion of installation of the countertops. A reasonable reading of Exhibit 6 calls for the conclusion that Respondent was to install the kitchen countertops as part of the kitchen cabinetry. [2] The contract in Exhibit 5 clearly does not comply with the minimum statutory requirements stated in A.R.S. § 32-1158(B). There was no dispute about this. [3] Those are DePaul’s phrases. [4] Exhibit 7. [5] Exhibit 8. [6] Exhibit 4. [7] CWO items are hereinafter referred to by “#” and the number of the item on the CWO. [8] Thus, Respondent’s constant reference to the Natural Stone Slab Waiver signed by Complainants is irrelevant. [9] DePaul’s opinion is not considered because he is not appropriately licensed for countertop work. [10] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [11] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [12] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996). [13] A subcontract that was outside the scope of Respondent’s license. [14] The circumstances of that case are not available to the Administrative Law Judge at this time.

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