ALJDEC decisions subject to certification as final

2014A-1525-ROC · Registrar of Contractors · 2014-12-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 6, 2014, at 8:00 a.m. The record was held open until November 27, 2014. APPEARANCES: The Arizona Registrar of Contractors (hereinafter “Registrar”) was represented by Assistant Attorney General, John Tellier, Esq. New Base Plastering LLC (hereinafter “New Base”) was represented by its attorney, Ronald M. Lehman, Esq., Gaboy, Rollman, & Bosse, PC. 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 New Base is the holder of License No. K-36.255424-D issued by the Registrar. It is a dual contractor’s license for plastering. The License lists Luis Gerado Mireles (hereinafter “Mr. Mireles”) as its member and qualifying party.[1] New Base is also the holder of License K-10.255708-D issued by the Registrar. It is a dual contractor’s license for drywall. The License lists Mr. Mireles as its member and qualifying party.[2] On or about April 19, 2005, the Registrar issued License No. K-36.204409-D to Mr. Mireles DBA New Base Plastering. The license lists Mr. Mireles as the owner and qualifying party.[3] On October 17, 2011, the Registrar revoked Mr. Mireles’ License No. K- 36.204409-D pursuant to the terms of the Registrar’s March 31, 2011 Order entered in Case No. 2010-[number redacted] and for Mr. Mireles’ failure to pay the Civil Penalty imposed by the March 31, 2011 Order.[4] On or about October 15, 2014, Aaron Irwin (hereinafter “Mr. Irwin”) filed a complaint with the Registrar alleging poor work by New Base in the performance of its October 17, 2011 oral contract with Mr. Irwin to provide the labor to re-stucco Mr. Irwin’s residence at 8320 S. Triangle R. Ranch Place in Vail, Arizona for approximately $10,500.00.[5] On or about November 18, 2013, the Registrar conducted a jobsite inspection and subsequently issued a Corrective Work Order, directing New Base to take appropriate corrective action at Mr. Irwin’s residence.[6] Testimony Testimony of Adam Stafford, Esq. Adam Stafford (hereinafter “Mr. Stafford”) testified that he is the Assistant Chief Counsel for the Registrar. Mr. Stafford stated that he was familiar with the rules and statutes of the Registrar. Mr. Stafford testified that he was familiar with the Citation and Complaint at issue. Mr. Stafford testified that A.R.S. § 32-1154(D) states that the expiration, cancellation, suspension, revocation, or voluntary surrender of a license by a licensee does not deprive the Registrar of jurisdiction to proceed with any investigation of or disciplinary proceeding against such licensee.[7] Mr. Stafford testified that on July 20, 2011, the Registrar issued an Order denying Mr. Mireles’ Petition for Rehearing in Case No. 2010-[number redacted].[8] Mr. Stafford stated that the Order denying the Petition for Rehearing provided a written reminder to Mr. Mireles that the civil penalty imposed in Case No. 2010-[number redacted] had to be paid. Mr. Stafford testified that on October 17, 2011, the Registrar revoked Mr. Mireles’ License No. K- 36.204409-D pursuant to the terms of the Registrar’s March 31, 2011 Order entered in Case No. 2010-[number redacted] and for Mr. Mireles’ failure to pay the Civil Penalty imposed by the March 31, 2011 Order. Mr. Stafford testified that the civil penalty imposed in Case No. 2010- [number redacted] was paid by Mr. Mireles on June 11, 2014. Mr. Stafford stated that the civil penalty was paid after the Citation and Complaint was filed in the matter at issue. Mr. Stafford testified that the Registrar requires that all contracts over $1,000.00 between contractors and homeowners shall be in writing.[9] Mr. Stafford stated that New Base failed to provide Mr. Irwin with a written contract for the construction work performed by New Base on Mr. Irwin’s residence at 8320 S. Triangle R. Ranch Place in Vail, Arizona. Mr. Stafford testified that general workmanship standards require that if a contractor accepts a subsurface as being an acceptable surface to place new work on, the contractor is then responsible for any failure in its own construction work caused by the subsurface. Mr. Stafford acknowledged that Mr. Mireles had voluntarily canceled Mr. Mireles’ License No. K-36.204409-D before it was revoked by the Registrar. Mr. Stafford stated that the voluntary cancellation did not affect the Registrar’s jurisdiction to discipline the license. Mr. Stafford’s testimony is found to be credible. Testimony of Registrar Investigator Mike Nieves Investigator Mike Nieves (hereinafter “Investigator Nieves) testified that on November 18, 2013, he conducted a jobsite inspection at Mr. Irwin’s residence at 8320 S. Triangle R. Ranch Place in Vail, Arizona (hereinafter “the residence”). Investigator Nieves stated that he observed that portions of the exterior plaster applied by New Base had failed and were separating from the sub-surface. Investigator Nieves stated that he subsequently issued a Corrective Work Order on November 19, 2013, directing New Base to take appropriate corrective action at the residence. Investigator Nieves testified that New Base was given twenty (20) days to fully comply with the terms of the Corrective Work Order. Investigator Nieves testified that he returned to the residence and performed a second onsite inspection on January 9, 2014, and observed that New Base had failed to fully comply with the terms of the Corrective Work Order. Investigator Nieves testified that he performed a third onsite inspection at the residence on July 21, 2014. Investigator Nieves stated that he observed that New Base had not fully complied with the terms of the Corrective Work Order. Investigator Nieves that he also observed new hairline cracking in the exterior stucco at the residence. Investigator Nieves testified that he performed a fourth onsite inspection at the residence on November 3, 2014. Investigator Nieves testified that he found that the items set forth in the Corrective Work Order had still not been fully corrected. Investigator Nieves opined that New Base had failed to fully comply with the terms of the Corrective Work Order. Investigator Nieves testified that Mr. Irwin had acted as his own general contractor for the construction of his residence. Investigator Nieves stated that he discovered that Mr. Irwin had utilized an unlicensed contractor to apply the initial exterior stucco application on the residence. Investigator Nieves testified that the initial exterior stucco application on the residence failed and that New Base entered into an oral agreement with Mr. Irwin to correct the failed stucco on the residence. Investigator Nieves acknowledged that he had not ordered New Base to repair the exterior stucco color on the residence. Investigator Nieves testified that Mr. Mireles voluntarily agreed to repair color mismatch on the exterior stucco on the residence. Investigator Nieves reviewed the photographs presented by New Base.[10] Investigator Nieves testified that there were now additional areas of concern in the exterior stucco on the residence. Investigator Nieves stated that the homeowner had not complained of the new items of concern within the applicable two-year statute of limitations for workmanship complaints that are filed with the Registrar. Investigator Nieves’ testimony is found to be credible. Testimony of Louis Mireles Mr. Mireles testified that he was supporting a family household of twelve people including a child with special needs. Mr. Mireles stated that New Base was the sole support for his family. Mr. Mireles testified that he began working in the plastering business in 1996 as a laborer. Mr. Mireles stated that he had completed over a thousand exterior plaster projects in the time that he had been a licensed contractor. Mr. Mireles testified that he handled the field work and that his wife handled the paperwork. Mr. Mireles testified that Case No. 2010-[number redacted] was the only prior matter in which the Registrar had issued adverse findings prior to the complaint at issue. Mr. Mireles stated that he has had only three dissatisfied customers over the time that he has been a licensed contractor. Mr. Mireles testified that in 2009, he advised Mr. Irwin not to install clay mine adobe plaster on the exterior of his residence. Mr. Mireles stated that Mr. Irwin decided to go with a cheaper unlicensed contractor. Mr. Mireles testified that Mr. Irwin contacted him again in October 2011. Mr. Mireles testified that exterior plaster that had been installed by the unlicensed contractor had failed. Mr. Mireles stated that he informed Mr. Irwin that the proper repair for the exterior stucco would be to completely remove and replace the deficient stucco. Mr. Mireles testified that Mr. Irwin rejected his advice and elected to have the deficient exterior stucco repaired for $16,500.00. Mr. Mireles testified that New Base only agreed to repair the existing exterior stucco on the house. Mr. Mireles acknowledged that New Base re- plastered Mr. Irwin’s entire residence. Mr. Mireles testified that Mr. Irwin did not want to spend the money necessary to do the job correctly. Mr. Mireles stated that Mr. Irwin inspected New Base’s stucco repair work on a daily basis. Mr. Mireles testified that Mr. Irwin was happy with the stucco work when it was completed. Mr. Mireles acknowledged that he had failed to use a written agreement for the construction work that New Base performed for Mr. Irwin. Mr. Mireles stated that he provided Mr. Irwin a written price on a New Base business card for the agreed-upon exterior stucco work. Mr. Mireles testified that he now realized that the failure to use a written contract was a mistake. Mr. Mireles stated that New Base normally uses written agreements for such work. Mr. Mireles testified that he was trying to help Mr. Irwin out. Mr. Mireles acknowledged that New Base applied new exterior plaster on a subsurface of failing plaster. Mr. Mireles testified that New Base was responsible for its plastering work if it failed. Mr. Mireles stated that New Base should not be responsible for the replacement of the underlying subsurface that had been installed by an unlicensed contractor. Mr. Mireles testified that New Base had fully complied with the terms of the Corrective Work Order issued in this matter and that Mr. Irwin now had a beautiful house. Testimony of Anna Maria Mireles Anna Maria Mireles (hereinafter “Mrs. Mireles”) testified that she is Mr. Mireles’ wife. Mrs. Mireles stated that she manages the office for New Base. Mrs. Mireles testified that she owns 50% of New Base. Mrs. Mireles testified that she sent the $500 civil penalty to the Registrar on April 25, 2011, along with New Base’s motion for reconsideration.[11] Mrs. Mireles stated that she read the Registrar’s July 20, 2011 Order denying the petition for rehearing. Mrs. Mireles testified that she disregarded the reminder of the $500 civil penalty because she knew that she had already sent the civil penalty to the Registrar. 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.[12] 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). New Base completely re-plastered the exterior of Mr. Irwin’s residence. Investigator Nieves credibly testified that portions of the exterior plaster installed by New Base had failed and that the Registrar issued a Corrective Work Order directing New Base to properly correct the exterior plaster on Mr. Irwin’s residence. Investigator Nieves testified that he returned to the residence on at least three separate times and that as later as November 3, 2014, New Base had still failed to fully resolve the workmanship issues with the exterior plastering on Mr. Irwin’s residence. This Tribunal concludes that New Base violated the charged provision of A.R.S. § 32-1154(A)(3),[13] namely, A.A.C. R4-9-108.[14] New Base entered into a construction agreement with Mr. Irwin for the complete re-plastering of Mr. Irwin’s residence for the total sum of $16,500.00. New Base failed to provide the homeowner with a written contract. Mr. Mireles acknowledged that he had failed to use a written agreement for the construction work that New Base performed for Mr. Irwin. Mr. Mireles testified that he now realized that the failure to use a written contract was a mistake. This Tribunal concludes that New Base violated the charged provision of A.R.S. § 32-1154(A)(12),[15] namely, A.R.S. § 32-1158(B).[16] New Base has a person, Luis Gerado Mireles, named on its License who is also named on License No. K-36.204409-D of Luis Gerado Mireles dba New Base Plastering. On October 17, 2011, the Registrar revoked Mr. Mireles’ License No. K-36.204409-D pursuant to the terms of the Registrar’s March 31, 2011 Order entered in Case No. 2010-[number redacted] and for Mr. Mireles’ failure to pay the Civil Penalty imposed by the March 31, 2011 Order. This Tribunal concludes that New Base violated the charged provision of A.R.S. § 32-1154(A)(20).[17] Investigator Nieves performed four different onsite inspections at the residence. Investigator Nieves testified that he performed the fourth onsite inspection at the residence on November 3, 2014. Investigator Nieves testified that he found that the items set forth in the Corrective Work Order had still not been fully corrected. Investigator Nieves opined that New Base had failed to fully comply with the terms of the Corrective Work Order. New Base did not establish that Mr. Irwin had refused reasonable access to New Base. This Tribunal concludes that New Base violated the charged provision of A.R.S. § 32-1154(A)(22).[18] RECOMMENDed order In view of the foregoing, it is recommended that License No. K- 36.255424-D and License No. K-10.255708-D of New Base shall be revoked. It is further recommended, in addition to the above-provided penalties, if any, that New Base 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 New Base 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 New Base’s contractors’ licenses, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with New Base, 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 five days from the date of the certification. Done this day, December 16, 2014.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors

----------------------- [1] See Exhibit 1 (application for Contractor’s License). [2] See Exhibit 2 (Application for Contractor’s License). [3] See Exhibit 3 (Application for Contractor’s License). [4] See Exhibit 4 (Citation and Complaint, Order and Webpage printout). [5] See Exhibit 5 (Complaint No. 2013-3266). [6] See Exhibit 6 (11/19/13 Corrective Work Order). [7] A.R.S. § 32-1154(D) provides as follows: D. The expiration, cancellation, suspension or revocation of a license by operation of law or by decision and order of the registrar or a court of law or the voluntary surrender of a license by a licensee shall not deprive the registrar of jurisdiction to proceed with any investigation of or action or disciplinary proceeding against such licensee, or to render a decision suspending or revoking such a license, or denying the renewal or right of renewal of such license. [8] See Exhibit 6 (7/20/11 Order Denying Petition for Rehearing). [9] 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.

[10] See Exhibit Nos. R-2 (Before and after photographs), R-3 (Photos taken by Mr. Mireles), R-4 (Completed house photos), and R-5 (Completed house photos taken by Mr. Mireles). [11] See Exhibit R-12 (Copy of 4/26/11 Receipt for mailing from New Base Plastering to Registrar of Contractors’ Legal Department). [12] 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.

[13] 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.” [14] 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.

[15] A.R.S. § 32-1154(A)(12) provides 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: 12. Failure in any material respect to comply with this chapter.

[16] 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.

[17] A.R.S. § 32-1154(A)(20) 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.

[18] A.R.S. § 32-1154(A)(22) 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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