ALJDEC decisions subject to certification as final

2013A-4479-ROC · Registrar of Contractors · 2014-03-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 13, 2014, at 8:00 a.m. APPEARANCES: The Registrar of Contractors (hereinafter “Registrar”) was represented by Assistant Attorney General, Seth T. Hargraves, Esq. Superior Pool Construction Inc. (hereinafter “Superior” or “Respondent”) was represented by its attorney, David Sandoval, Esq., Carmichael & Powell, 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 Background Superior is the holder of License No. A-9.124919-C issued by the Registrar.

Superior is also the holder of License No. B-5.124920-R issued by the Registrar. On or about February 15, 2013, the Registrar received a Complaint against Superior from the Ashton Ranch Community Homeowners Association, Inc. (hereinafter “Ashton” or “Complainant”) alleging that Superior had abandoned a construction project (“the project” or “the Ashton construction project”) that it had undertaken, disregarded plans and specifications, failed to perform work in a professional and workmanlike manner, committed a fraudulent act, failed to complete the construction project for the contract price, that the contracts provided by Superior failed to include the minimum elements of a contract required by statute, and that Superior was “directly involved in the theft of motors and pumps” from the facility.[1] On or about April 1, 2013, the Registrar conducted a jobsite inspection of the construction project at 14433 N. 148th Ln., Surprise, Arizona 85379. The Registrar subsequently issued a Corrective Work Order, directing Superior to remedy its deficient workmanship on the construction project.[2] The Corrective Work Order provided, in pertinent part, as follows: • Complainant is concerned about the roughness and irregularities of the pool plaster, mainly around the stairs, seats and shallow areas. Complaint indicated the spa seats, stairs and shallow areas in pools at locations #1 and #2. Complainant stated the Respondent attempted to smooth out the roughness at the bottom of the children’s pool at the second location, and it seemed to work.

• It’s the inspector’s opinion that the plaster is rough and inconsistent in the mentioned areas and Respondent shall correct by appropriate means.

• Complainant states the shell steps at pools #1 and #2 are installed crooked and out of line.

• At pools #1 and #2, the shell steps are out of alignment at least ¾” of an inch in front and sides. Respondent shall correct by the appropriate means.

• Complainant indicated the 1” x 1” tile on the steps and seats are installed crooked and out of line, plaster covering the tile edges, voids in between some tiles, and inconsistent spacing between tiles; at pools & spas, locations #1 and #2.

• Respondent shall correct tile by the appropriate means.

Testimony of Registrar Inspector/Investigator Steve Klein Inspector/Investigator Steve Klein (hereinafter “Inspector Klein”) stated that the Corrective Work Order was issued on April 4, 2013. Inspector Klein testified that the Registrar received correspondence from the Complainant on or about June 3, 2013, indicating that Superior had failed to comply with the Corrective Work Order.[3] Inspector Klein testified that he received a telephone call from the owner of Superior after the Corrective Work Order was issued. Inspector Klein testified that the owner said that Superior would take care of the work set forth in the Corrective Work Order. Inspector Klein stated that he performed a prehearing inspection at 14433 N. 148th Ln., Surprise, Arizona 85379 on January 17, 2014. Inspector Klein testified that he confirmed that the items set forth in the Corrective Work Order had not been corrected. Inspector Klein opined that Superior failed to comply with the terms of the Corrective Work Order. Inspector Klein testified that the plaster on swimming pools #1 and #2 was unacceptably rough and inconsistent in the spas and on the seats and shallow areas of the swimming pools. Inspector Klein stated that the shell steps in swimming pools #1 and #2 had been installed crooked and out-of- line. Inspector Klein testified that the 1”x1” tile on the steps and seats of swimming pools #1 and #2 were crooked and out-of-line. Inspector Klein opined that Superior’s construction work on the swimming pools’ plaster, installation of the shell steps, and installation of the 1”x1” tiles failed to comply with applicable workmanship and industry standards. Inspector Klein testified that the contract prepared by Superior and utilized as the parties’ construction agreement did not contain the minimum elements of a contract required by A.R.S. § 32-1158.[4] Inspector Klein stated that the contract prepared by Superior and utilized as the parties’ construction agreement did not contain an estimated completion date, did not inform the Complainant that it had a right to file a complaint with the Registrar for alleged violations of A.R.S. § 32-1154(A), did not contain the Registrar’s telephone number and website address, and did not state that complaints must be made within the applicable time period as set forth in A.R.S. § 32-1155(A). Inspector Klein testified that the parties’ construction agreement required Complainant to pay Superior a down payment of 50% of the contract price in violation of applicable statute.[5] Inspector Klein testified that Superior’s public case history with the Registrar of Contractors indicated that twenty-eight (28) complaints had been filed with the Registrar of Contractors against Superior.[6] Inspector Klein testified that the plaster that Superior installed in Complainant’s swimming pools is too rough and fails to comply with applicable workmanship and industry standards. Inspector Klein testified that the shell steps are crooked and failed to comply with applicable workmanship and industry standards. Inspector Klein stated that the shell steps should be even. Inspector Klein testified that some of the 1”x1” tiles on the steps and seats in the swimming pools are crooked and some of the grout lines are inconsistent. Inspector Klein stated that the installation of the 1”x1” tiles fails to comply with applicable workmanship and industry standards. Inspector Klein testified that the 1”x1” tiles should be installed in an even manner. Inspector Klein acknowledged that no more than 5% of the 1”x1” tiles required correction. Inspector Klein’s testimony is found to be credible. Testimony of Russell Budz Russell Budz (hereinafter “Mr. Budz”) testified that he is the property manager for Lonestar Property Management Company. Mr. Budz stated that Lonestar Property Management Company is the management company for Complainant. Mr. Budz testified that he is the individual who signed the Complaint against Superior on behalf of Complainant. Mr. Budz repeated the items set forth in the Complaint. Mr. Budz testified that Superior was retained to remodel Complainant’s existing swimming pools. Mr. Budz stated that Superior failed to comply with the terms of the parties’ construction agreement. Mr. Budz testified that Superior failed to pass required county inspections. Mr. Budz opined that Superior failed to perform its work in a professional and workmanlike manner. Mr. Budz testified that Superior failed to comply with the terms of the Corrective Work Order. Mr. Budz stated Superior did not contact Complainant to make arrangements to perform the corrective work set forth in the Corrective Work Order. Mr. Budz testified that Complainant had not received “a peep or a word” from Superior. Mr. Budz testified that Complainant had not denied access to Superior to perform the corrective work that was directed in the Corrective Work Order. Mr. Budz stated that he was present at the jobsite on a daily basis. Mr. Budz testified no one stepped on the swimming pool tiles during the construction work on the swimming pools. Mr. Budz’s testimony is found to be credible. Testimony of Lorraine Herrill Brown Lorraine Herrill Brown (hereinafter “Ms. Brown”) testified that she is the construction manager/office manager for Superior. Ms. Brown stated that she was the project manager for the Ashton construction project. Ms. Brown testified that Superior and Ashton have had a difficult relationship. Ms. Brown testified that Ashton chose to go from a plaster finish to a Pebble-Tec type of finish. Ms. Brown stated that the Pebble-Tec type of finish is much rougher than normal swimming pool plaster and that people are often surprised at the roughness of the Pebble-Tec type finish. Ms. Brown testified that Superior had to chip out the old plaster finish in the swimming pools before the new Pebble-Tec type finish could be applied. Ms. Brown stated that many people who do not understand or have experience with swimming pool reconstruction are surprised at the very rough appearance of the swimming pool shell once the plaster is removed. Ms. Brown testified that the rough finish of the swimming pool shell is normal. Ms. Brown testified that it was not uncommon to fail a county inspection. Ms. Brown stated that problem with the county inspection for Complainant’s swimming pools involved the swimming pool drains. Ms. Brown testified that all of the construction work on Complainant’s swimming pools ultimately passed the required county inspections. Ms. Brown testified that the 1”x1” tiles in the swimming pool are crooked because people kept walking on the tile before they were properly set. Ms. Brown stated that Superior had to replace numerous broken tiles during the construction project because of damage caused by people walking on the newly installed tiles. Ms. Brown testified that she observed Ashton’s board members walking on the tiles in the swimming pools while construction was ongoing despite Superior’s request that people stay out of the uncompleted swimming pools. Ms. Brown asserted that Superior had not been able to comply with the terms of the Corrective Work Order because Ashton would not respond to Superior’s numerous telephone calls to gain access to the property. Ms. Brown testified that Superior sent a certified letter to Complainant on December 17, 2013, asking for access to the swimming pools in order to comply with the terms of the Corrective Work Order.[7] Ms. Brown stated that Superior was unable to comply with the Corrective Work Order because it was not granted access to the swimming pools. Ms. Brown testified that she had worked for Superior for ten years. Ms. Brown stated that during her ten years of employment with Superior, the only complaint against Superior that was required to go to hearing was Ashton’s Complaint. Ms. Brown acknowledged that she was not employed by Superior during the time period of the Corrective Work Order. Ms. Brown testified that she left her position with Superior in mid-March for several months. Ms. Brown stated that she returned to Superior in her current capacity in late June or early July, 2013. Ms. Brown testified that she was only gone for a “couple” of months. Ms. Brown testified that Superior had made repeated telephone calls to Complainant asking for access to the swimming pools to comply with the terms of the Corrective Work Order. Ms. Brown stated that Complainant failed to reply to Superior’s numerous telephone calls. Ms. Brown testified that she contacted the Inspector in attempt to gain access to Complainant’s property. Ms. Brown stated that Complainant had fired Superior from the jobsite several times and that she was under impression that the complaint had gone away. Ms. Brown testified that after the Citation was issued, she sent a certified letter to Complainant asking for access to the swimming pools in order to comply with the Corrective Work Order.[8] Ms. Brown testified that all of the items on the Corrective Work Order are easily correctable. Ms. Brown stated that Superior is willing to correct all of the items set forth in the Corrective Work Order if Ashton provides access to perform the corrective action directed in the Corrective Work Order to Superior. Ms. Brown testified that she personally mailed the registered letter to Mr. Budz’s post office box. Ms. Brown stated that she received electronic confirmation that the registered letter had been received by Mr. Budz. Ms. Brown testified that Complainant did not respond to Superior’s written request for access. Ms. Brown acknowledged that the parties’ contract failed to contain the minimum elements of a contract required by statute. Ms. Brown testified that the contracts were missing the stop date for the construction project and that the contracts failed to inform Complainant of its right to file a complaint with the Registrar of Contractors. Ms. Brown stated that Superior had corrected its contracts so that all new contracts fully comply with all applicable statutory requirements.[9] Ms. Brown acknowledged that Superior had required more than $1,000.00 as a down payment for the construction project. Ms. Brown testified that she believed that the provisions of A.R.S. § 32-1158.1 only apply to new swimming pool construction. Ms. Brown stated that it was common in the swimming pool remodeling industry to require more than a $1,000.00 down payment.[10] Administrative notice is taken of Superior’s prior license record for License No. A-9.124919-C as reflected on the Registrar’s public website on March 21, 2014. Such prior license record reflects that License A-9.124919- C was suspended for non-renewal from July 1, 2013, through July 1, 2013. Administrative notice is taken of Superior’s prior license record for License No. B-5.124920-R as reflected on the Registrar’s public website on March 21, 2014. Such prior license record reflects that B-5.124920-R was suspended for non-renewal from July 1, 2013, through July 1, 2013. CONCLUSIONS OF LAW 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.[11] 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). The plaster on swimming pools #1 and #2 is unacceptably rough in the spas and on the seats and shallow areas of the swimming pools and fails to comply with applicable workmanship and industry standards. The shell steps in swimming pools #1 and #2 had been installed crooked and out-of-line and fail to comply with applicable workmanship and industry standards. The 1”x1” tile on the steps and seats of swimming pools #1 and #2 was crooked and out-of-line and fails to comply with applicable workmanship and industry standards. This Tribunal concludes that Superior violated the charged provision of A.R.S. § 32-1154(A)(3),[12] namely, A.A.C. R4-9- 108.[13] The contract prepared by Superior and utilized as the parties’ construction agreement did not inform Complainant that it had a right to file a complaint with the Registrar for alleged violations of A.R.S. § 32-1154(A), did not contain the Registrar’s telephone number and website address, and did not state that complaints must be made within the applicable time period as set forth in A.R.S. § 32-1155(A). This Tribunal concludes that Superior violated the charged provision of A.R.S. § 32-1154(A)(13), namely, A.R.S. § 32-1158(B).[14] Inspector Klein performed a prehearing inspection on January 17, 2014. Inspector Klein reviewed all of the items set forth in the Corrective Work Order. Superior failed to comply with the terms of the Corrective Work Order. Superior did not establish that Complainant refused reasonable access to Superior. This Tribunal concludes that Superior violated the charged provision of A.R.S. § 32-1154(A)(23).[15] A.R.S. § 32-1154(A)(21) provides grounds for suspension or revocation of a contractor’s license as follows: The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions:

Having a person named on the license who is or was named on any other license in this state or in another state that is under suspension or revocation for any act or omission that occurs while the person is or was named on the license unless the prior revocation was based solely on a violation of this paragraph.

RECOMMENDed order In view of the foregoing, it is recommended that License No. A- 9.124919-C and License No. B-5.124920-R of Superior shall be suspended for a period of seven days. It is further recommended, in addition to the above-provided penalties, if any, that Superior 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 Superior 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 Superior’s contractors’ licenses, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Superior, 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, March 27, 2014. /s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors

----------------------- [1] See Exhibit No. 3 (Complaint with attachments). [2] See Exhibit No. 7 (Corrective Work Order). [3] See Exhibit No. 9 (6/3/13 from Ashton’s attorney). [4] See Exhibit No. 8 (Notice of Minimum Elements of a Contract with attached invoices). [5] A.R.S. § 32-1158.01 provides, in relevant part, as follows:

A. In addition to the requirements of section 32-1158, a licensed contractor who enters into a contract for the construction or installation of a residential in-ground swimming pool or spa with a purchaser who resides in the residence or who intends to reside in the residence after the completion of the contract shall include at least the following provisions: 1. A provision providing the purchaser the opportunity to request standard contractor's payment and performance bonds in a form approved by the registrar, securing the completion of the work and payment for services and materials. The cost of the payment and performance bond shall be paid by the purchaser of the swimming pool or spa and the contractor shall not charge a surcharge or a service charge. 2. The following payment provisions: (a) A down payment payable on the execution of the contract of not more than one thousand dollars.

[6] See Exhibit No. 10 (Print-out of the Registrar of Contractors’ Public Case History for Superior). [7] See Exhibit No. C (12/17/13 Letter). [8] See Exhibit No. C (12/17/13 Letter). [9] See Exhibit No. A (New Superior addendum for contract form). [10] A.R.S. § 32-1158.01 provides, in relevant part, as follows: A. In addition to the requirements of section 32-1158, a licensed contractor who enters into a contract for the construction or installation of a residential in-ground swimming pool or spa with a purchaser who resides in the residence or who intends to reside in the residence after the completion of the contract shall include at least the following provisions: 2. The following payment provisions: (a) A down payment payable on the execution of the contract of not more than one thousand dollars.

[11] A.A.C. R2-19-119 provides as follows: A. Standard of proof. Unless otherwise provided by law, the standard of proof is a preponderance of the evidence. B. Burden of proof. Unless otherwise provided by law: 1. The party asserting a claim, right, or entitlement has the burden of proof; 2. A party asserting an affirmative defense has the burden of establishing the affirmative defense; and 3. The proponent of a motion shall establish the grounds to support the motion.

[12] 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.” [13] 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.

[14] A.R.S. § 32-1158 provides, in pertinent part, as follows: B. From and after December 31, 2007, any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information: 1. The name of the contractor and the contractor's business address and license number. 2. The name and mailing address of the owner and the jobsite address or legal description. 3. The date the parties entered into the contract. 4. The estimated date of completion of all work to be performed under the contract. 5. A description of the work to be performed under the contract. 6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. 7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner. 8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract. 9. That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar's telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32-1155, subsection A. The information in this paragraph must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor or the contractor's designated representative. This paragraph does not apply to a person who is subject to and complies with section 12-1365. C. At the time of signing a contract the owner shall be provided a legible copy of all documents signed and a written and signed receipt for and in the true amount of any cash paid to the contractor by the owner.

[15] A.R.S. § 32-1154(A)(23) provides as follows:

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.

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