ALJDEC decisions subject to certification as final

2012A-6146-ROC · Registrar of Contractors · 2013-05-21

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 1, 2013 APPEARANCES: Ronald David Porter doing business as R and R Enterprises appeared on his own behalf. Vito Frederick Austin doing business as Vito’s Construction appeared on his own behalf. ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer _____________________________________________________________________ FINDINGS OF FACT Background and Procedure The Arizona Registrar of Contractors (“the Registrar”) issued License No. KB-2.229267-D to Vito Frederick Austin dba Vito’s Construction (“Vito’s”). The Registrar issued License No. C-8.265618-R to Ronald David Porter dba R and R Enterprises (“R and R”). The license issued to R and R was a residential license only. On or about December 24, 2012, R and R filed a Complaint with the Registrar in Lake Havasu City that alleged that Vito’s had failed to pay R and R the sum of $110,880.00 for construction work that R and R allegedly performed as a subcontractor for Vito’s at 14750 South Highway 95, Lake Havasu City, Arizona. This Complaint was designated by the Registrar as 2012-6140. Later that day, Vito’s filed a Complaint with the Registrar in Yuma that alleged Vito’s had to redo all the work that R and R had completed on the project. This Complaint was designated by the Registrar as 2012-6146. The Registrar’s assigned inspector, Cliff Corlett, performed a jobsite inspection. On January 14, 2013, Inspector Corlett issued a Corrective Work Order (“CWO”) finding that abandonment did not apply. Inspector Corlett also found, and the parties agreed, there were issues with the handicapped bathroom that needed to be repaired. Inspector Corlett “did not find all of the cosmetic tile issues that [Vito’s] was pointing out to be that significant and most could be repaired.” Inspector Corlett determined R and R installed one layer of cement backer board prior to applying the tile when the approved plans called for two layers to be installed. The parties were unable to resolve their differences and requested an administrative hearing. The Registrar then issued a formal Citation and Complaint charging Vito’s with possible violations of A.R.S. § 32-1154(A)(11) and A.R.S. § 32- 1154(A)(14). The Registrar also issued a formal Citation and Complaint charging R and R with possible violations of A.R.S. § 32-1154(A)(1), A.R.S. § 32-1154(A)(2), A.R.S. § 32-1154(A)(3), A.R.S. § 32-1154(A)(17), and A.R.S. § 32-1154(A)(23). The Registrar referred the matter to the Office of Administrative Hearings, an independent State agency, for an evidentiary hearing. Inspector Corlett did not conduct a pre-hearing inspection as the parties agreed R and R had not done any further work on the project. A hearing was held on May 1, 2013. Inspector Corlett testified. R and R presented the testimony of Ronald Porter, Roger Porter, Mark Hubbard, Arturo Gonzalez, and Rick Powell. Vito’s presented the testimony of Vito Frederick Austin and Nicholas Hawkins. Hearing Evidence On or about October 25, 2012, R and R entered into a subcontract agreement with Vito’s to complete the tile work for a bathroom remodel of a Pilot Truck Stop (“Pilot”). The agreement called for R and R to complete work on bathrooms for a total price of $110,880.00. This total price included the requirement that R and R purchase all necessary materials for the project. The parties agreed the total payment equated to a payment of $9,240.00 per bathroom. Vito’s stated that it had no reason to believe R and R did not have a commercial license for tile work. However, Vito’s acknowledged that R and R stated they had paid all the fees required by the Registrar and were waiting for its certificate. Vito’s paid $41,000.00 for materials for all 12 bathrooms. The parties agreed the materials purchased equated to a reduction of approximately $3,417.00 per bathroom. R and R completed the required work in five bathrooms. Included in the five bathrooms was the handicapped bathroom that R and R acknowledged had workmanship issues that needed to be repaired. In the five bathrooms completed, R and R installed one layer of cement backer board although the approved plans called for two layers to be installed. At some point, R and R billed Vito’s for the four completed bathrooms seeking payment of for the work completed. Vito’s refused to pay until all the work was completed to Pilot’s satisfaction and Pilot had remitted payment to Vito’s as outlined in the contract. After R and R failed to correct the issues Vito’s identified with the five bathrooms, Vito’s hired a different contractor to complete the remaining bathrooms. According to the testimony, Vito’s redid the tile work in the five bathrooms R and R initially completed. R and R did not bill Vito’s for the handicapped bathroom. According to Vito’s, the cost to completely redo the handicapped bathroom was $14,800.00, and Vito’s was paid $14,000.00 for the bathroom under its contract with Pilot. As a result, Vito’s lost $800.00 on the handicapped bathroom. According to Vito’s, the cost to rip out, replace, and grout the tile in the four bathrooms R and R initially completed was $19,500.00, or a cost of $4,875.00 per bathroom. Vito’s failed to present any documentation supporting its testimony regarding the cost of repairing the work completed by R and R. Regarding the four bathrooms at issue, the parties agree R and R was to be paid $9,240.00 per bathroom including materials, but that Vito’s had paid $3,417.00 per bathroom for those materials. Thus, R and R should have been paid $5,823.00 per bathroom, or a total of $23,292.00 for the four bathrooms. Assuming, arguendo, that Vito’s cost to repair the work completed in the four bathrooms totaled $19,500.00, Vito’s owed R and R $3,792.00 for the work completed on the four bathrooms. At one point during the hearing, Mr. Austin testified that when the four bathrooms were repaired, a second layer of cement back board was installed. Later in the hearing, Mr. Austin acknowledged that all the bathrooms had only one layer of cement backer board and that the use of only one layer of cement backer board was not an issue to as to the completion of the project. Vito’s was paid by Pilot for the completed project. As of the hearing, Vito’s had not paid R and R for any work completed. Administrative notice is taken of R and R’s prior License record as reflected on the Registrar’s public website. Such prior License record reflects that on May 21, 2013, R and R’s license was current and one complaint was pending against the license. Administrative notice is taken of Vito’s prior License record as reflected on the Registrar’s public website. Such prior License record reflects that on May 21, 2013, Vito’s license was current and two complaints were pending against the license. CONCLUSIONS OF LAW The Registrar has jurisdiction to determine whether R and R and Vito’s violated the charged subsections of A.R.S. § 32-1154(A). A.R.S. §§ 32-1151 to 32-1169. A complainant bears the burden of proof to establish a 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, 838 (1952). A respondent bears the burden to establish affirmative defenses by the same evidentiary standard. See A.A.C. R2-19-119(B)(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). Vito’s did not offer any evidence relating to abandonment and Inspector Corlett did not find abandonment was applicable. As such, Vito’s did not establish that R and R abandoned the contract or refused to perform after submitting a bid on work without legal excuse for the abandonment or refusal in violation of A.R.S. § 32-1154(A)(1).[1] The use of one layer of cement backer board, while not what the approved plans required, was acceptable to Vito’s, the county inspector, and Pilot as payment was made for the work completed and the rooms are open and functioning. Therefore, Vito’s failed to establish that R and R’s installation of one layer of cement backer board was a departure from or disregard of plans that was prejudicial to another, in violation of A.R.S. § 32-1154(A)(2).[2] As to the four bathrooms for which R and R billed Vito’s, any work that was unacceptable to Vito’s and/or Pilot was cosmetic in nature. Therefore, Vito’s failed to establish that R and R’s work on the four bathrooms was unprofessional and not workmanlike in violation of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108.[3] As to the handicapped bathroom, the parties agreed there were significant issues that required the bathroom be redone. Therefore, Vito’s established that R and R’s work on that bathroom was unprofessional and not workmanlike in violation of A.R.S. § 32-1154(A)(3). R and R admitted it contracted beyond the scope of its license when it contracted to perform tile work in a commercial setting when it was licensed for residential only. Therefore, Vito’s established that R and R contracted beyond the scope of its license in violation of A.R.S. § 32- 1154(A)(17).[4] Vito’s hired someone to complete repairs to the handicapped bathroom. It was not established through the testimony that R and R was given an appropriate amount of time to complete the work required in the CWO before Vito’s had someone else complete the work. Therefore, Vito’s failed to establish that R and R violated A.R.S. § 32-1154(A)(23).[5] Vito’s acknowledged that it owed R and R a sum of at least $3,792.00 for the four bathrooms it completed. Even reducing that payment by the $800.00 Vito’s allegedly lost on the handicapped bathroom, Vito’s still owed R and R more than $750.00. However, Vito’s failed to present any documentation to support its reported costs of repairing the work performed by R and R, so an exact amount owed cannot be determined at this time.[6] R and R established that Vito’s failed to pay it monies in excess of $750.00 in violation of A.R.S. § 32-1154(A)(11).[7] Vito’s acknowledged that at the time it contracted with R and R, R and R informed it that it had paid all the necessary fees to the Registrar for a commercial license and that it was just waiting for the certificate. At that point, Vito’s knew or should have known that R and R was not properly licensed for commercial work. Therefore, R and R established that Vito’s knowingly entered into a contract with a contractor not properly licensed in violation of A.R.S. § 32-1154(A)(14).[8] RECOMMENDED ORDER In view of the foregoing, it is recommended that commencing on the effective date of the final Order, Ronald David Porter dba R and R Enterprises’ License No. C-8.265618-R shall be placed on disciplinary probation for a period of six (6) months. It is further recommended that commencing on the effective date of the final Order, Vito Frederick Austin dba Vito’s Construction’s License No. KB-2.229267-D shall be revoked unless the Registrar of Contractors receives and accepts written proof that Vito’s has paid the principal sum of $2,992.00 in certified funds to R and R. It is further recommended that if on or before the effective date of the final Order, Vito’s provides acceptable written proof and the Registrar accepts such proof that Vito’s has paid the principal sum of $2,992.00 in certified funds to R and R, then the above provided License revocation shall not take place and, instead, Vito’s License No. KB-2.229267-D shall be placed on disciplinary probation for a period of six (6) months. 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, May 21, 2013.

/s/ Tammy L. Eigenheer 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 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.” [2] 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. [3] 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.” [4] 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.” [5] 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.” [6] To the extent greater liquidated damages may be established, such a determination must be made in a different venue. [7] A.R.S. § 32-1154(A)(11) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, [f]ailure by a licensee or agent or official of a licensee to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee's operations as a contractor when the licensee has the capacity to pay or, if the licensee lacks the capacity to pay, when the licensee has received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased. [8] A.R.S. § 32-1154(A)(11) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[k]nowingly entering into a contract with a contractor for work to be performed for which a license is required with a person not duly licensed in the required classification.”

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